28
QuizMultiple Choice

Profit — Quiz

Question 28 • Personal Finance and Economics

What is the best definition of marginal cost?

Answer
A
the possible income from producing an additional item
B
the financial gain from business activity minus expenses
C
the price of producing one additional unit of a good
D
the additional income gained from selling an additional good

Explanation

Marginal cost is the extra cost of producing one additional unit of a good. Choice A, “the price of producing one additional unit of a good,” gives this definition. The additional income from selling a unit is marginal revenue, not marginal cost.

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