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Marginal cost is directly equal to its ..........
Fixed costs
Fixed and variable costs
Neither fixed nor variable costs
Variable costs
- Marginal Cost refers to the cost of producing one additional unit of a good. It usually depends on variable costs.
- Option 1: Fixed Costs
- These are costs that do not change with the level of output, such as rent or salaries. They don't affect marginal cost.
- Option 2: Fixed and Variable Costs
- Combining fixed and variable costs does not define marginal cost, as fixed costs are not relevant to the additional unit cost.
- Option 3: Neither Fixed nor Variable Costs
- This is incorrect because marginal cost is influenced by variable costs, which change with production.
- Option 4: Variable Costs
- Marginal cost is tied to variable costs, as these vary directly with output.
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