Concept:Marginal cost is the additional cost a firm incurs when it produces one more unit of a good or service.
Explanation:Marginal cost measures the change in total cost that results from increasing output by one unit.
For example, if producing
10 units costs
$100 and producing
11 units costs
$108, then the marginal cost of the
11th unit is
$8.
This extra cost guides a firm's decision on whether to expand production.
Option A is incorrect because the lowest cost of producing goods describes minimum average cost, not marginal cost.
Option B is incorrect because the production cost of the most efficient firm in an industry is not the definition of marginal cost.
Option C is incorrect because the production cost of the most inefficient firm does not represent marginal cost either.
Only option D correctly defines marginal cost as the cost of producing the last or extra unit of output.
Answer:D. the cost of production of the last or extra unit of goods produced by a firm