Definition, Meaning & Synonyms
marginal-cost
Noun
/ˈmɑːrdʒɪnəl kɔːst/
Definition
Marginal cost refers to the additional expense incurred when producing one more unit of a good or service.
Examples
- The marginal cost of producing one more smartphone is significantly lower once the initial production costs have been covered.
- Understanding marginal cost helps businesses set optimal pricing strategies.
- Firms aim to keep marginal costs low to maximize profitability.
Meaning
It is a key concept in economics used to analyze the cost implications of production decisions and to optimize resource allocation.
Synonyms
- incremental cost
- additional cost
- variable cost
