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.

QTotal Cost (TC)Marginal Cost (MC)Average Cost (AC)
1101010
21668
32377.6
43298
545139
6662111

.

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.

 

By on November 28th, 2012 in