CMA Foundation · Fundamentals of Business Economics and Management · Cost of Production
A factory produces 100 units at a total cost of ₹5,000 and 101 units at a total cost of ₹5,030. What is the marginal cost of the 101st unit?
Marginal cost is the addition to total cost from producing one more unit. Total cost rises from ₹5,000 to ₹5,030 when output goes from 100 to 101 units, so the marginal cost of the 101st unit is ₹30.
- A₹30Correct
- B₹50
- C₹49.80
- D₹5,030
Explanation
Marginal cost = change in total cost / change in output = (5,030 - 5,000)/1 = ₹30. ₹50 is the average cost at 100 units, a different concept.
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