Which of the following statement/statements are true?
Statement 1: In the short run, marginal cost is the increase in total variable cost (TVC) due to increase in production of one extra unit of output.
Statement 2: The sum of marginal costs up to that level gives us the total variable cost at that level.

Both the statements are true

The correct answer is Option 1: Both the statements are true

The same thing is talked about. First statement talks about process to get MC from TVC. And statement 2 talks about how to get TVC from MC.

• Statement 1: In the short run, marginal cost is the increase in TVC due to an increase in production of one extra unit of output. (True)

  • Marginal Cost (MC) is the additional cost incurred to produce one more unit of output.
  • Since Total Fixed Cost (TFC) remains constant in the short run, any increase in cost comes from Total Variable Cost (TVC).
  • Thus, MC is the change in TVC when one extra unit is produced, making this statement correct.

• Statement 2: The sum of marginal costs up to that level gives us the total variable cost at that level. (True)

  • Marginal Cost (MC) represents the change in TVC for each additional unit produced.
  • If we sum up all the MC values from the first unit to a given level of output, we get Total Variable Cost (TVC) at that level.