Q1 of 31 Page 1

If it is given that the total variable cost for producing 15 units of output is Rs 3000 and for 16 units is Rs 3,500. Find the value of Marginal Cost.


TVC (u=15) = 3000


TVC (u=16) = 3500


MC = TCn-TCn-1


= TVCn-TVCn-1


= 3500 – 3000 = 500


Explanation


Marginal cost (MC) is the change in total cost when an additional unit of output is produced. It is the slope of the total cost curve. Since fixed cost (TFC) is constant in the short run and the change in TC is brought about variable cost (TVC), MC can be computed as the difference between the variable cost.



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