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What is Marginal Cost?

 , updated on July 21, 2023
Marginal cost is the expenditure required to produce one additional unit of a product or service. This is an important concept in economics and management as strategic operational and marketing decisions are often influenced by marginal cost.

Economies of Scale

In many cases, your marginal costs decline as you reach economies of scale. However, when a factory or facility such as a data center reaches full capacity, the marginal cost suddenly shoots up dramatically as the cost of new property, plant and equipment must be considered. In many cases, firms continue producing more units until their marginal cost approaches the market price for an item.
Overview: Marginal Cost
Type
Definition
The cost to produce one more unit of a product or service.
Related Concepts
Next: Marginal Change
More about business cost:
Abatement
Applied Cost
Business Equipment
Capacity Cost
Capex
Capital Improvement
Carrying Costs
Closing Costs
COGS
Cost Of Capital
Cost Of Revenue
Cost Of Living
Direct Cost
Distress Cost
Expenses
CAC
Fixed Costs
Friction Cost
Employee Costs
Holding Costs
Intangible Cost
Marginal Cost
Operating Cost
Operating Expenses
Opex
Legacy Costs
Outlay Cost
Lifetime Cost
Overhead Costs
Menu Costs
Relevant Cost
Shrinkage
Normal Costs
Sunk Costs
Tangible Cost
Operational Costs
Travel Expenses
Unit Cost
Opportunity Cost
Variable Costs
Prospective Cost
Semi Variable Cost
Step Costs
Switching Costs
Transaction Costs
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Marginal Change

The definition of marginal change with examples.

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The definition of marginal utility with examples.

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A list of common types of business cost.

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Business Costs

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Cost Escalation

A definition of cost escalation with an example.

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Relevant Cost

A definition of relevant cost with examples.

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Cost Competition

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Cost Goals

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