Marginal cost
Definition. Marginal cost is the additional cost incurred from producing one more unit of output, or for a consumer, the additional cost of acquiring one more unit. It is calculated as the change in total cost divided by the change in quantity.
Rational agents weigh marginal cost against marginal benefit, choosing the quantity at which the two are equal. For firms, the marginal cost curve typically rises as output increases owing to diminishing returns.
This term belongs to Rational Decision Making in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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