Marginal Cost


Definition of Marginal Cost

Marginal Cost is the cost of producing an extra unit.

It is the addition to Total Cost from selling one extra unit.

Q Total Cost (TC) Marginal Cost (MC) Average Cost (AC)
1 10 10 10
2 16 6 8
3 23 7 7.6
4 32 9 8
5 45 13 9
6 66 21 11

.

Diagram Showing Marginal Cost

marginal-cost

Note:  Marginal cost is often shaped like this in the short term because of the law of diminishing marginal returns.