Let C(x) and R(x) be the total cost and the total revenue of x units of a product. Match List-I with List-II
| List-I | List-II | ||
| (A) | Marginal cost | (I) | \(\displaystyle\frac{R(x)}{x}\) |
| (B) | Average cost | (II) | \(\displaystyle\frac{dC}{dx}\) |
| (C) | Marginal revenue | (III) | \(\displaystyle\frac{dR}{dx}\) |
| (D) | Average revenue | (IV) | \(\displaystyle\frac{C(x)}{x}\) |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A)-(II), (B)-(IV), (C)-(III), (D)-(I)
A marginal quantity is an instantaneous rate of change with respect to the output x (a derivative). An average quantity is a total divided by the number of units.
(A) Marginal cost
This matches (II) \(\frac{dC}{dx}\), the rate of change of the total cost with respect to output.
(B) Average cost
This matches (IV) \(\frac{C(x)}{x}\), the cost per unit.
(C) Marginal revenue
This matches (III) \(\frac{dR}{dx}\), the rate of change of the total revenue with respect to output.
(D) Average revenue
This matches (I) \(\frac{R(x)}{x}\), the revenue per unit (which equals the price per unit).