What is marginal cost in economics?
Economics provides various concepts and methods for ensuring that firms operate in a cost-effective manner that maximizes profits. One such concept is that of marginal cost, an important consideration for businesses that considers increases in production.IdentificationIn economics, marginal cost is the increase in production costs that results from an increase in production.FeaturesTo calculate the marginal cost, divide the change in total production costs by the change in quantity of goods produced.ConsiderationsIncreasing production of a product requires additional inputs, such as workers and equipment, which raises production costs. This increase in production costs represents the marginal cost.FunctionMarginal cost, coupled with marginal revenue, helps businesses determine whether they are maximizing their profits.SignificanceAs long as marginal revenue (the change in total revenue from the sale of additional products) exceeds marginal cost, higher production is profitable for a bu
