Practice question · True or false
Marginal cost at a quantity q is the total cost at q divided by q.
Hints
- Marginal means 'at the margin', that is, for one additional unit.
- Dividing the total by the quantity gives a different economic quantity with its own name.
Show the answer
False
Why
False. That formula is average cost; marginal cost is the DERIVATIVE of total cost. Fixed costs inflate the average but vanish from the derivative, which is exactly why the two diverge and why decisions about producing one more unit use the marginal figure.
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