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Marginal Cost Calculator

Calculate marginal cost for production analysis.

Marginal Cost Calculator

Alternative Method: Enter total costs and quantities for two production levels

Marginal Cost

per additional unit

Average Total Cost

per unit (at quantity 2)

Interpretation

Error

Formula

MC = ΔTC / ΔQ

MC = Marginal Cost

ΔTC = Change in Total Cost

ΔQ = Change in Quantity

Example

A company's total cost increases from $1,000 to $1,200 when production increases from 100 to 120 units.

  • Change in Total Cost: $1,200 - $1,000 = $200
  • Change in Quantity: 120 - 100 = 20 units
  • Marginal Cost: $200 ÷ 20 = $10 per unit

Understanding Marginal Cost

What is Marginal Cost?

  • The additional cost of producing one more unit
  • Helps determine optimal production levels
  • Critical for pricing and profit maximization
  • Varies with production scale and efficiency

Applications

  • Production planning and optimization
  • Pricing strategy development
  • Break-even analysis
  • Resource allocation decisions

Key Relationships

MC < ATC

Average cost is decreasing

MC = ATC

Average cost is minimized

MC > ATC

Average cost is increasing

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