Marginal Cost

Marginal Cost

Marginal Cost


“What happens to total cost if one more unit is produced?”


Everything in economics has a cost associated with it. And these costs and can be divided into different categories. Take a factory producing solar panels for example. There is already a base cost with operating the factory, and the total cost for each unit of production. This is known as the Marginal Cost and can be used in risk assessment of engineering projects. Sometimes when more units are produced in a given span, the cost goes down because of economies of scale, while other times it goes up.


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