Define and explain how to calculate marginal costs (MC)

Economics Dec 15, 2020

Define and explain how to calculate marginal costs (MC).

Expert Solution

The Marginal Cost reflects the economic outlay required in order to produce one more unit of a given good or service that is provided by the company. The marginal cost of a product changes as output levels increase or decrease.

It is calculated by subtracting the Total Costs if the extra unit were produced less the Total Costs if the extra unit were not produced.

Marginal cost = Total Cost if Extra Unit Produced - Total Cost if Extra Unit is not produced

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