Q.

Which of the following costs is related to marginal cost?

A. Variable Cost
B. Implicit Cost
C. Prime Cost
D. Fixed Cost
Answer» A. Variable Cost
Explanation: In economics, marginal cost is the change in the total cost that arises when the quantity produced is Incremented by one unit. That is, it is the cost of producing one more unit of a good. Marginal cost is independent of the fixed cost and depends on the changes in thevariable factors. Since fixed costs do not change with output, there are no marginal fixed costs when output is increased in the short run. It is only the variable costs that vary with output in the short run.
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