Marginal cost (MC = ΔC/Δq) is the amount by which a firm’s cost changes if the firm produces one more unit of output.
In economics and finance, marginal cost is the change in the totalcost that arises when the quantity produced has an increment by unit. That is, it is the cost of producing one more unit of a good.
Marginal cost also equals the change in variable cost
from a one-unit increase in output because…fixed cost is fixed; MC = ΔVC/Δq = w(ΔL/Δq) = w/MPL
- ◦Goes up, then MC must goes down. When the production
- is really effective, it is less costly to produce more.
◦Goes down, then MC must goes up. When the production is really ineffective (diminishing marginal return), it is more costly to produce more.