To determine the difference between marginal cost and marginal revenue, we need to carefully examine each definition:
1. Marginal cost is the money earned from selling one more unit of a good. Marginal revenue is the money paid for producing one more unit of a good.
2. Marginal cost is the money paid for producing one more unit of a good. Marginal revenue is the money earned from selling one more unit of a good.
3. Marginal cost is the money a producer might make from one more unit. Marginal revenue is the money a producer actually makes from one more unit.
4. Marginal cost is the money a producer actually makes from one more unit. Marginal revenue is the money a producer might make from one more unit.
Analyzing these options:
- Option 1 incorrectly swaps the definitions of marginal cost and marginal revenue.
- Option 2 correctly defines both terms:
- Marginal cost is indeed the money paid for producing one more unit of a good.
- Marginal revenue is the money earned from selling one more unit of a good.
- Option 3 and Option 4 confuse the certainty associated with both terms. Marginal cost is not about the money a producer makes but rather the expense incurred, and marginal revenue is not about a potential figure but the actual earnings.
Thus, the correct answer is:
Marginal cost is the money paid for producing one more unit of a good. Marginal revenue is the money earned from selling one more unit of a good.
