What is Marginal Cost?
- Marginal cost is the additional cost of production associated with a small increase in the quantity produced.
How Do I Remember It?
- Think of marginal cost as the cost of producing “just one more.” It’s like adding one more item to a production line and calculating how much extra it costs.
Real World Example
- For a bakery producing cakes, the marginal cost would include the cost of additional ingredients, labor, and electricity needed to bake one more cake. If the bakery is already operating at full capacity, producing an additional cake might require overtime wages for workers, resulting in a higher marginal cost.
Follow us on TikTok, Instagram, and YouTube below.
