Answer:
Marginal cost refers to the increase or decrease in the cost of producing one more unit or serving one more customer.
Step-by-step explanation:
Definition: Marginal cost is the additional cost incurred for the production of an additional unit of output. The formula is calculated by :
Marginal Cost = (Change in the total cost)/(Change in the product output)[tex][/tex]
The marginal cost is the cost of producing an additional product unit.
Further explanation:
Marginal cost:
Marginal cost refers to the change in the production due to the production of an additional unit. The marginal cost is the cost of producing an additional unit. The marginal cost is calculated by diving the change in the production cost by the change in the quantity of the product. The marginal cost is an important aspect from the production point of view because it provides the information about the additional cost of the unit produced. The cost of the unit tend to decrease as the production increases because the average fixed cost decreases.
Therefore, the management of the business consider the change in the cost of the product from one level to another level to optimize the production with the help of the economics of scale concept. Ideally, the profit is maximum when the marginal cost is equal to the marginal revenue.
Thus, the marginal cost is the cost of producing an additional product unit.
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Answer details
Grade: Senior School
Subject: Economics
Chapter: Marginal utility
Keywords: What, best, definition, marginal,cost, additional, product, unit.
