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.

 

[luca]

Think of marginal cost like this: it’s the cost of making just one more item. Businesses use it to figure out if producing more makes sense and what price to set.

 

[Lily]

Marginal cost is the additional cost of production of one more unit of an item. It assists the businesses in identifying the most lucrative production level. It is determined as the change in total cost/change in quantity, it is computed:

MC = Delta TC/Delta Q

 

[John Smith]

Marginal cost is the additional expense incurred when producing one more unit of a product or service. It includes variable costs like labor and materials. Businesses use marginal cost to determine pricing, production levels, and profitability by comparing it with marginal revenue.