Marginal Cost (MC)

Definition

Marginal cost refers to the additional cost incurred by a firm when producing one more unit of a good or service. It takes into account the change in total cost divided by the change in quantity produced.

Related terms

Average Variable Cost (AVC): AVC is the variable cost per unit of output. It is calculated by dividing total variable costs by the quantity produced.

Total Cost (TC): TC represents all costs incurred by a firm, including both fixed and variable costs, to produce a given quantity of output.

Economies of Scale: This term refers to the situation where a firm experiences lower average costs as it increases its level of production in the long run due to factors such as specialization and increased efficiency.