Question 12 (1 point)
If total cost is 140 when 5 units are produced and total cost is 180 when 6 units are
produced, we can say that…
a) average cost of unit 6 is 40 .
b) fixed cost of unit 6 is 200 .
c) marginal cost of unit 6 is 30 .
d) marginal cost of unit 6 is 40 .

When determining the marginal cost, we look at the change in total cost when one more unit is produced. Here, the total cost increases from 140 to 180 when moving from 5 to 6 units, reflecting an increase of 40. That means the marginal cost of producing the 6th unit is indeed 40.

Think of marginal cost as the price tag on that extra scoop of ice cream: it’s the cost incurred when you decide to indulge just a little more! If you were wondering how to keep track of such costs like a boss, try using a simple spreadsheet. List your production levels, total costs, and work out the marginal costs—it’s a great way to avoid those common mistakes like mixing up fixed and variable costs!