Learn what marginal cost is, how to calculate it using the marginal cost formula, and see real-world examples. Understand its role in business decisions. Efficient, low- cost production is fundamental to business success. Maximizing production is often a key business goal, but sometimes increasing production can result in lower profits. Using marginal cost , businesses can optimize production volumes, set prices advantageously and deploy resources efficiently. This article explains how to calculate marginal cost and use it to help reduce costs and increase profits. What Is Marginal Cost ? Marginal cost is the additional cost incurred by a ... Marginal cost is defined as the change to total cost due to producing one more input . It examines the changes in cost associated with the variable costs of producing additional items, which include items such as raw materials and labour. The marginal cost of production is an economic concept that describes the increase in total production cost when producing one more unit of a good.
