Marginal Cost Analysis in Economics Quiz

Marginal Cost represents the cost of producing one additional unit of a good in economics.

In the short run, Variable Cost primarily influences Marginal Cost.

In the context of Marginal Cost, 'marginal' refers to the cost of the last unit produced.

Marginal Cost is calculated as the change in total cost divided by the change in quantity produced.

When Marginal Cost is less than Average Total Cost, it indicates that Average Total Cost is decreasing.

When economies of scale are present, Marginal Cost decreases as the level of output increases.

Marginal Cost plays a role in maximizing profit by equating it to marginal revenue for determining the optimal level of production.

If input prices increase, Marginal Cost tends to increase.

In perfectly competitive markets, decision-making is closely associated with Marginal Cost and Marginal Revenue.

Changes in technology can cause a shift in the Marginal Cost curve.

The intersection of the Marginal Cost curve below the Average Variable Cost curve marks the point of minimum Average Variable Cost.

The Marginal Cost curve becomes the supply curve for a firm in a perfectly competitive market when it is above the Average Variable Cost curve.

Economies of scale lead to a flattening of the Marginal Cost curve.

When a firm operates at its capacity, Marginal Cost increases sharply.

In a competitive market, firms use Marginal Cost to match price with Marginal Revenue for profit maximization.