Profit — Quiz

Question 7 • Personal Finance and Economics

What is the difference between marginal cost and marginal revenue?

Answer

Marginal cost is the money a producer actually makes from one more unit. Marginal revenue is the money a producer might make from one more unit.

Marginal cost is the money a producer might make from one more unit. Marginal revenue is the money a producer actually makes from one more unit.

Marginal cost is the money paid for producing one more unit of a good. Marginal revenue is the money earned from selling one more unit of a good.

Marginal cost is the money earned from selling one more unit of a good. Marginal revenue is the money paid for producing one more unit of a good.

Explanation

Marginal cost is the additional cost of producing one more unit, while marginal revenue is the additional money earned by selling one more unit. Choice A states both definitions correctly. Choices C reverses the terms, and B and D confuse actual cost or revenue with hypothetical amounts.

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