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Marginal cost is the change in total cost that arises when the quantity produced is increased. It depends on the variable costs, the fixed costs, and the productivity of the inputs. Learn more about marginal cost concepts, formulas, and examples.
A cost curve is a graph of the costs of production as a function of total quantity produced. Learn about the different types of cost curves, such as short-run and long-run, average and marginal, fixed and variable, and how they relate to each other and to the production function.
Learn about average cost (AC) or unit cost in economics, which is equal to total cost divided by the number of units produced. Explore the short-run and long-run AC curves, their shapes, slopes and relationships with marginal cost and returns to scale.
Total cost is the minimum financial cost of producing some quantity of output, which includes variable and fixed costs. Learn how to decompose total cost, calculate marginal cost and profit, and use cost curves to illustrate economic concepts.
Learn how the marginal product of labor (MPL) is the change in output that results from employing an added unit of labor. See how MPL relates to costs, average product of labor, diminishing marginal returns, and profit maximization.
Learn how economists measure profit as the difference between revenue and total costs, including explicit and implicit costs. Compare economic profit, normal profit, and accounting profit in competitive and uncompetitive markets.
A production function is a mathematical relation between inputs and outputs of goods, used in neoclassical economics to analyze allocative efficiency and factor income distribution. Learn about different forms of production functions, such as linear, Cobb-Douglas, Leontief and quadratic, and how to graph them.
C'(Q) = marginal cost–the derivative of total cost with respect to output. This yields: ′ + = ′ or "marginal revenue" = "marginal cost". A firm with market power will set a price and production quantity such that marginal cost equals marginal revenue.