ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In economics, the marginal cost is the change in total production cost that comes from making or producing one additional unit. To calculate marginal cost, divide the change in production costs by the change in quantity.

Detailed explanation-2: -Marginal costs – The extra (additional) cost of producing one more unit of output; equal to the change in total cost divided by the change in output (and, in the short run, to the change in total variable cost divided by the change in output).

Detailed explanation-3: -When marginal cost is greater than average variable or average total cost, AVC or ATC must be increasing. Therefore, the only possible point at which marginal cost equals average variable or average total cost is the minimum point.

Detailed explanation-4: -The mechanics of marginal costs Variable costs, by contrast, increase and decrease according to the level of production. In many cases, however, the increase in variable costs will be less than the increase in production output. In economics, this concept is referred to as the economies of scale.

Detailed explanation-5: -Marginal cost is the increment in cost that occurs when the output produced is increased by one unit. More formally, it is the derivative of the total cost function with respect to output.