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A '''cost''' is what a firm, an individual or society pays to produce or consume [[goods and services]], it is the consumption of resources such as labour time, [[capital]], materials, [[fuel]]s, etc. In economics, all resources are valued at their opportunity cost, which is the value of the alternative use of the resources. [[Cost]]s are defined in a variety of ways and under a variety of assumptions that affect their value. The opposite of a cost is a benefit and often both are considered together, for example, net cost is the difference between gross costs and benefits.<ref>A. Verbruggen, W. Moomaw and J. Nyboer. ''Glossary of terms used in the: Special Report on Renewable Energy Sources and Climate Change Mitigation (SRREN).'' [Onlince], Available: http://www.ipcc.ch/publications_and_data/publications_and_data_glossary.shtml [May.29, 2016]</ref>
In general, a '''[[cost]]''' is what a firm, individual, or society pays in order to produce or consume [[goods and services]]. It is the consumption of resources such as labour time, [[capital]], materials, [[fuel]]s, etc. In economics, all resources are valued at their ''opportunity cost'', which is the value of the alternative use of the resources. [[Cost]]s are defined in a variety of ways and under a variety of assumptions that affect their value. The opposite of a cost is a ''benefit'' and often both are considered together. For example, ''net cost'' is the difference between gross costs and benefits.<ref>A. Verbruggen, W. Moomaw and J. Nyboer. ''Glossary of terms used in the: Special Report on Renewable Energy Sources and Climate Change Mitigation (SRREN).'' [Onlince], Available: http://www.ipcc.ch/publications_and_data/publications_and_data_glossary.shtml [May.29, 2016]</ref>


==Marginal Cost==
<onlyinclude>'''<big>Marginal cost</big>''' is the cost of adding '''''one additional unit''''' of output or the cost of increasing an activity.</onlyinclude><ref>J.Black, N. Hashimzade, and G. Myles. (2009) "Marginal Cost." [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199237043.001.0001/acref-9780199237043-e-1895?rskey=5wQ9oV&result=1, 2009 [May 29, 2016]</ref> It is the change in the [[total cost]] (<math>\Delta</math>TC) divided by the change in output (<math>\Delta</math>Q). This can also be expressed as the variable cost (<math>\Delta</math>VC) divided by the change in output (<math>\Delta</math>Q). This is because the fixed cost doesn't change, but the total cost (TC) will alter in sync with the variable cost (VC).<ref>A. Goolsbee, S. Levitt and C. Syverson. ‘’Microeconomics’’. New York: Worth Publishers, 2013, pp. 276.</ref>
<onlyinclude>Marginal cost is the cost of adding one additional unit of output or the cost of increasing an activity.</onlyinclude><ref>J.Black, N. Hashimzade, and G. Myles. (2009) "Marginal Cost." [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199237043.001.0001/acref-9780199237043-e-1895?rskey=5wQ9oV&result=1, 2009 [May 29, 2016]</ref> It is the change in the total cost (<m>\Delta</m> TC) divided by the change in output (<m>\Delta</m> Q). This can also be expressed as the variable cost (<m>\Delta</m> VC) divided by the change in output (<m>\Delta</m> Q) because the fixed cost doesn't change the total cost (TC) will alter in sync with the variable cost (VC).<ref>A. Goolsbee, S. Levitt and C. Syverson. ‘’Microeconomics’’. New York: Worth Publishers, 2013, pp. 276.</ref><br />


::::::::::::'''MC'''= <m>\frac{\Delta TC}{\Delta Q}</m><br />


Essentially, this is how much it costs to produce or consume one more unit of something, to see what this looks like in the context of a firm, see: [[costs for a firm]].


==See Also==
<center>
{|
|<big>'''MC=''' <math>\frac{\Delta TC}{\Delta Q}</math></big>
|‎ ‎ ‎ ‎‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎  ‎ ‎ ‎ ‎ ‎ ‎ ‎‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎  ‎ ‎ ‎ ‎ ‎ ‎  ‎ ‎ ‎ ‎ ‎ ‎  ‎ ‎ ‎ ‎ ‎ ‎  ‎ ‎ ‎ ‎ ‎ ‎  ‎ ‎
|                <big>'''MC=''' <math>\frac{\Delta VC}{\Delta Q}</math></big>
|}
</center>
 
 
Essentially, this is how much it costs to produce or consume one more unit of something. To see what this looks like in the context of a firm, see [[costs for a firm]].[[File:Image marginal cost.png|thumb|Figure 1. This is a cost curve, it shows how price changes in response to quantity.<ref name=":0">Lumen Learning (2025). (Accessed July 31, 2026). ''Production Cost'' [Online]. Available: https://www.coursesidekick.com/economics/study-guides/boundless-economics/production-cost</ref>]]Figure 1 on the right compares marginal cost (MC) with [[Total cost#Average Total Cost|average total cost]] (ATC) and marginal revenue (MR).<ref name=":0" /> As the average total cost declines, the cost of one additional unit (marginal cost) is less. As average total cost increases, the marginal cost is more. Average total cost is at a minimum when it is ''equal'' to the marginal cost.
==For Further Reading==
*[[Cost]]
*[[Variable cost]]
*[[Variable cost]]
*[[Total cost]]
*[[Total cost]]
*[[Costs for a firm]]
*Or explore a [[Special:Random|random page]]


==References==
==References==
{{reflist}}
{{reflist}}
[[Category: Uploaded]]

Latest revision as of 20:43, 4 August 2026

In general, a cost is what a firm, individual, or society pays in order to produce or consume goods and services. It is the consumption of resources such as labour time, capital, materials, fuels, etc. In economics, all resources are valued at their opportunity cost, which is the value of the alternative use of the resources. Costs are defined in a variety of ways and under a variety of assumptions that affect their value. The opposite of a cost is a benefit and often both are considered together. For example, net cost is the difference between gross costs and benefits.[1]

Marginal cost is the cost of adding one additional unit of output or the cost of increasing an activity.[2] It is the change in the total cost (ΔTC) divided by the change in output (ΔQ). This can also be expressed as the variable cost (ΔVC) divided by the change in output (ΔQ). This is because the fixed cost doesn't change, but the total cost (TC) will alter in sync with the variable cost (VC).[3]


MC= ΔTCΔQ ‎ ‎ ‎ ‎‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ ‎ MC= ΔVCΔQ


Essentially, this is how much it costs to produce or consume one more unit of something. To see what this looks like in the context of a firm, see costs for a firm.

Figure 1. This is a cost curve, it shows how price changes in response to quantity.[4]

Figure 1 on the right compares marginal cost (MC) with average total cost (ATC) and marginal revenue (MR).[4] As the average total cost declines, the cost of one additional unit (marginal cost) is less. As average total cost increases, the marginal cost is more. Average total cost is at a minimum when it is equal to the marginal cost.

For Further Reading

References

  1. ↑ A. Verbruggen, W. Moomaw and J. Nyboer. Glossary of terms used in the: Special Report on Renewable Energy Sources and Climate Change Mitigation (SRREN). [Onlince], Available: http://www.ipcc.ch/publications_and_data/publications_and_data_glossary.shtml [May.29, 2016]
  2. ↑ J.Black, N. Hashimzade, and G. Myles. (2009) "Marginal Cost." [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199237043.001.0001/acref-9780199237043-e-1895?rskey=5wQ9oV&result=1, 2009 [May 29, 2016]
  3. ↑ A. Goolsbee, S. Levitt and C. Syverson. ‘’Microeconomics’’. New York: Worth Publishers, 2013, pp. 276.
  4. ↑ 4.0 4.1 Lumen Learning (2025). (Accessed July 31, 2026). Production Cost [Online]. Available: https://www.coursesidekick.com/economics/study-guides/boundless-economics/production-cost
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