What is marginal cost?

[Noam]

I’m trying to understand what is marginal cost in economics and business.
How is marginal cost calculated when production increases?
Why is marginal cost important for pricing and production decisions?

 

[Ynessira]

Marginal cost is the additional expense incurred by producing one more unit of a product or service. It includes variable costs like materials and labor. Understanding marginal cost helps businesses decide optimal production levels and pricing strategies to maximize profit and efficiency in operations.

 

[Daxton]

Marginal cost is the additional expense a business incurs to produce one more unit of a good or service. It helps in pricing and production decisions by showing how costs change with small changes in output levels.