Learn what marginal cost is, how to calculate it, and how it affects production decisions. Find out the difference between marginal cost and marginal benefit, and see examples and worksheets on marginal cost . What is the definition of marginal cost ? MC indicates the rate at which the total cost of a product changes as the production increases by one unit. However, because fixed costs do not change based on the number of products produced, the marginal cost is influenced only by the variations in the variable costs . 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. What is Marginal Cost? The additional cost incurred to the total cost when one more unit of output is produced is known as Marginal Cost. Marginal Cost is also known as Incremental Cost. Marginal Cost can be used to determine the optimal production volume and pricing.
