Question

the marginal cost of an activity is the
change in the cost of the activity that results from an extra unit of the activity.
same as the total cost of the activity.
ratio of total cost to the level of the activity.
change in the level of the activity divided by the change in the cost of the activity.
reservation cost.

Explanation:

To determine the correct option, we recall the definition of marginal cost. Marginal cost is defined as the change in total cost when one additional unit of an activity (or output) is produced.

• The first option says "change in the cost of the activity that results from an extra unit of the activity" which matches the definition of marginal cost.
• The second option is incorrect because total cost is the sum of all costs, not the same as marginal cost.
• The third option describes average cost (total cost divided by quantity), not marginal cost.
• The fourth option is the reciprocal of what marginal cost represents (it would be related to the rate of change of activity with respect to cost, not the other way around).
• The fifth option, reservation cost, is a different concept (related to the cost of not doing an activity or the minimum cost to engage in an activity) and not related to marginal cost.

Answer:

A. change in the cost of the activity that results from an extra unit of the activity.