Assertion (A) : In short run, the marginal cost of output is the cost of additional labour and…
In the conventional short-run model fixed capital does not vary, while extra output incurs additional labour/material costs. Thus marginal cost is additional variable-input…
Choose your answer
Assertion (A) : In short run, the marginal cost of output is the cost of additional labour and materials used in production.
Reason (R) : Materials and labour used in production alone vary in short run.
Answer and explanation
Correct answer C
In the conventional short-run model fixed capital does not vary, while extra output incurs additional labour/material costs. Thus marginal cost is additional variable-input cost and the reason explains it. Real firms may vary energy/other services too; alone is understood as the stylised two-variable-input model.
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UGC NET Economics