Marginal Cost Of Production
The change in total cost that comes from making or producing one additional item. The purpose of analyzing marginal cost is to determine at what point an organization can achieve economies of scale. The calculation is most often used among manufacturers as a means of isolating an optimum production level. Investopedia Says:
Manufacturing concerns often examine the cost of adding one more unit to their production schedules. This is because at some point, the benefit of producing one additional unit and generating revenue from that item will bring the overall cost of producing the product line down. The key to optimizing manufacturing costs is to find that point or level as quickly as possible. Related Terms:
Economies Of Scale
Long Run
Long Run Incremental Cost - LRIC
Long-Run Average Total Cost - LRATC
Minimum Efficient Scale
Short Run
Unit Cost |