ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -What Is Marginal Cost? Marginal cost is the cost to produce one additional unit of production. It is an important concept in cost accounting as marginal cost helps determine the most efficient level of production for a manufacturing process.

Detailed explanation-2: -Marginal private cost (MPC) is the change in the producer’s total cost brought about by the production of an additional unit of a good or service. It is also known as marginal cost of production.

Detailed explanation-3: -If the plant’s marginal social costs are higher than the plant’s marginal private costs, the marginal external cost is positive and results in a negative externality, meaning it produces a negative effect on the environment.

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 refers to the increase or decrease in the cost of producing one more unit or serving one more customer. It is also known as incremental cost.