Question

Define total cost and marginal cost ? explain with example

Answer 1

Answer:

TC= Change in the Marginal cost/Change in quantity

MC =TCn-TCn-1

Answer 2

In Microeconomics,Total Cost(TC) refers to the summation or aggregate of Fixed Cost(FC) and Variable Cost(VC).Marginal Cost(MC) is calculated as the additional or incremental cost of producing one more unit of output by the firm/company.

Explanation:

TC basically involves FC and VC of production at a certain time period.FC refers to the costs incurred by the firm/company that are fixed or constant regardless of the level of production.VC implies those costs or expenses that varies in accordance with the changes in production level.Examples of FC can be land rent,utility or electricity bills etc which have to paid irrespective of the production level and the examples of VC can be labor costs or expenses,which varies to changes in production.

MC represents the cost or expense required to produce one more unit of any product or service by the firm or company.Any changes in MC will affect the TC as MC can also be defined as change in TC to produce one more unit of a product or service.