Marginal Cost

Marginal Cost Assignment Help

Marginal Cost

Marginal Cost refers to the change in total cost due to production of one more or one less unit of output. Thus, if n units of goods are being produced we can calculate marginal cost as follows:

MC = TCn – TC(n – 1)

Thus, if n = 10 units MC = TC of 10 units minus TC of 10 – 1, i.e. 9 units.

When production changes not by single units of quantity (such as 9 units to 10 units) but by bulk of units such as shown in column 3 where output increases from 10 to 22 to 37 and so on till 80 units with successive increase in variable factor, the formula for calculating marginal cost is

MC = ∆ TC / ∆ Q

Where ∆ TC is the change in total cost and ∆Q is the change in total quantity of output.


Submit Homework

Submit your homework for a free quote