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In economics, the marginal cost is the change in the total cost that arises when the quantity produced is increased, i.e. the cost of producing additional quantity. [1] In some contexts, it refers to an increment of one unit of output, and in others it refers to the rate of change of total cost as output is increased by an infinitesimal amount.
Within economics, margin is a concept used to describe the current level of consumption or production of a good or service. [1] Margin also encompasses various concepts within economics, denoted as marginal concepts, which are used to explain the specific change in the quantity of goods and services produced and consumed.
Marginalism is a theory of economics that attempts to explain the discrepancy in the value of goods and services by reference to their secondary, or marginal, utility. It states that the reason why the price of diamonds is higher than that of water, for example, owes to the greater additional satisfaction of the diamonds over the water.
Marginal cost (MC): Marginal cost is obtained from the additional cost that results from increasing output by one unit. It is the additional cost per additional unit of output. [7] Cost curves: It is the graphical presentation of the costs of production as a function of total quantity produced [8] [9]
Marginal Analysis is considered the one of the chief tools in managerial economics which involves comparison between marginal benefits and marginal costs to come up with optimal variable decisions. Managerial economics uses explanatory variables such as output, price, product quality, advertising, and research and development to maximise net ...
Behavioral economics is the study of the psychological (e.g. cognitive, behavioral, affective, social) factors involved in the decisions of individuals or institutions, and how these decisions deviate from those implied by traditional economic theory. [1] [2] Behavioral economics is primarily concerned with the bounds of rationality of economic ...
A marginal benefit is a benefit (howsoever ranked or measured) associated with a marginal change. The term “marginal cost” may refer to an opportunity cost at the margin, or more narrowly to marginal pecuniary cost — that is to say marginal cost measured by forgone cash flow. Other marginal concepts include (but are not limited to):
The applications of the marginal cost of public funds include the Samuelson condition for the optimal provision of public goods and the optimal corrective taxation of externalities in public economic theory, the determination of tax-smoothing policy rules in normative public debt analysis and social cost-benefit analysis common in practical ...