Marginal cost is the incremental cost arising from producing:
AOne additional unit
BOne thousand units
CStandard batch
DYearly output
Answer & Solution
Correct answer: A. One additional unit
1. Marginal cost as understood in economics is the cost added by producing one extra unit.
2. It captures the change in total cost when output rises by one unit.
3. Fixed cost does not vary with one unit so it contributes nothing.
4. Hence marginal cost relates to one additional unit.
_Source: ICAI BoS Inter Paper 3, Ch 14 "Marginal Costing", §14.1 ¶3_
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