What is an example of a marginal cost?

The correct answer highlights the concept of marginal cost, which refers to the additional cost incurred from producing one more unit of a good or service or, in this context, the cost associated with undertaking one more hour of studying. This additional time directly correlates with the resource (time) used to enhance the learning process, making it a clear example of marginal cost.

When you study for an additional hour, you're weighing the benefits of that extra hour of study against what you could be doing instead with that time. This reflects the idea of marginal decision-making, where the focus is on evaluating the cost of the next unit or action.

In contrast, examining the total cost of producing a specific number of widgets represents a comprehensive view of costs rather than the incremental approach of marginal cost. Similarly, hiring a new employee can also lead to additional costs, but that expense isn't precisely the marginal cost due to its broader implications on labor and operational costs. Finally, the general expenses of running a business encompass various fixed and variable costs, lacking the specificity that marginal cost embodies when analyzing the effect of a small change in production or decision-making.