Practice Exam

Question 11 • Economics

What is the difference between marginal cost and marginal revenue?

Answer

Marginal cost is the money a producer actually earns from selling more units, while marginal revenue is the money a producer might earn from one more unit.

Marginal cost is the money a producer pays for making one more unit, while marginal revenue is the money a producer earns from selling one more unit.

Marginal cost is the money a producer might earn from one more unit sold, while marginal revenue is the money a producer will earn from one more unit.

Marginal cost is the money a producer earns from selling one more unit, while marginal revenue is the money a producer pays for making one more unit.

Explanation

Marginal cost is the additional cost of producing one more unit. Marginal revenue is the additional revenue earned by selling one more unit. Therefore, choice B correctly distinguishes the producer’s added expense from the added money earned.

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