What is marginal cost in economics?

In economics, the marginal cost is the change in the total cost that arises when the quantity produced is incremented, the cost of producing additional quantity. 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.

How to calculate marginal cost of nth unit of production?

Here, ΔC represents the change in the total cost of production and ΔQ represents the change in quantity. When the quantity is increased by 1 unit, then the marginal cost of the nth unit of production can also be calculated using the following formula: MCn = TCn - TCn-1, where MC represents marginal cost and TC represents the total cost.

What is short run marginal cost?

where denotes an incremental change of one unit. Short run marginal cost is the change in total cost when an additional output is produced in the short run and some costs are fixed. On the right side of the page, the short-run marginal cost forms a U-shape, with quantity on the x-axis and cost per unit on the y-axis.

What is the difference between marginal private and social costs?

Of great importance in the theory of marginal cost is the distinction between the marginal private and social costs. The marginal private cost shows the cost borne by the firm in question. It is the marginal private cost that is used by business decision makers in their profit maximization behavior.