The additional cost incurred by producing an additional unit of output is known as

1. Analyze the question The question asks for the term used for the extra cost of producing one more unit of output. The key words are "additional cost" and "additional unit".

2. Explain the concept In economics, the word "marginal" means "additional" or "extra". Marginal cost (MC) is the change in total cost that results from producing one more unit of output.

Formula: MC = Change in Total Cost ÷ Change in Quantity, or MC = TCₙ − TCₙ₋₁

3. Go through the options

• A. Fixed cost: Costs that do not change with output, such as rent or the factory building. Wrong.
• B. Total cost: The sum of all fixed and variable costs (TC = FC + VC). It is not the cost of one extra unit. Wrong.
• C. Average cost: Total cost divided by the number of units (AC = TC ÷ Q). It is the cost per unit on average, not the extra cost of one more unit. Wrong.
• D. Marginal cost: The cost of producing one additional unit. Correct.

4. Quick example If producing 10 bags of garri costs ₦5,000 and producing 11 bags costs ₦5,400, then: MC = ₦5,400 − ₦5,000 = ₦400

5. Answer The correct option is D. Marginal cost.

Exam tip: Link the word "additional" or "extra" with "marginal". The same idea appears in marginal revenue (extra revenue from selling one more unit) and marginal utility (extra satisfaction from consuming one more unit). Whenever you see "additional", think "marginal".