If variable cost rises from \( \$ 60 \) to \( \$ 100 \) as output increases from 15 to 20 units, the marginal cost of the twentieth unit is \( \$ 100 \) is \( \$ 5 \) is \( \$ 40 \) is \( \$ 8 \) cannot be determined without total cost
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Did you know that marginal cost is essentially the extra cost incurred from producing one additional unit of a good? To find it, you subtract the total variable cost of producing the initial quantity from the total variable cost of producing the additional quantity. In this case, with variable costs rising from $60 for 15 units to $100 for 20 units, the marginal cost of producing the 20th unit would be \((100 - 60) / (20 - 15) = \$8\). It's a common mistake to confuse variable cost with marginal cost! Remember, while variable costs pertain to the costs that change with output, marginal cost specifically focuses on the cost incurred when one more unit is produced. Keep this distinction in mind to avoid miscalculating costs in your financial analysis!