Theory of Production and CostPYQ - Dec 2023Question 54 of 20
All Questions

Marginal cost is defined as:

Options

AChange in total cost due to one unit change in output
BTotal cost divided by output
CChange in variable cost divided by change in output
DBoth a and c
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Correct Answer

✅ Option d — Both a and c

All Options:

  • AChange in total cost due to one unit change in output
  • BTotal cost divided by output
  • CChange in variable cost divided by change in output
  • DBoth a and c

About This Chapter: Theory of Production and Cost

Paper

Paper 4: Business Economics

Weightage

10%

Key Topics

Function, Cost Concepts (Short/Long Run)

This chapter explores how firms produce goods and services. It covers Production Functions, the Laws of Returns (Increasing, Constant, Diminishing), and all cost concepts including Total Cost, Average Cost, Marginal Cost, Fixed Cost, and Variable Cost. Understanding why the AC and MC curves are U-shaped is crucial for exam success.

View Official ICAI Syllabus

Exam Strategy Tip

The relationship between MC and AC curves is a favorite examiner topic. Remember: MC cuts AC at its minimum point. Also focus on the difference between Short Run and Long Run cost curves.

Related Comparison Tables

Fixed Cost vs Variable Cost: Cost Concepts

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