The total cost of a firm is Rs 80 for 3 units of output, Rs 95 for 4 units of output, and Rs. 115 for 5 units of output. What is the marginal cost for the 5th unit of output?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Rs. 20.
Marginal Cost (MC) is the addition to total cost when one more unit of output is produced.
MC=TCn−TCn−1
Given:
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TC for 4 units = Rs 95
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TC for 5 units = Rs 115
$MC_5$ = 115−95 =20