In economics, what term describes the change in total cost that arises when the quantity produced is incremented by one unit?
Show answer
Marginal cost
Marginal cost is the reason why airlines offer last-minute standby tickets; if a plane is flying anyway, the cost of adding one more passenger is very low. Understanding this helps businesses decide the optimal level of production where profit is highest.
Also asked as:
- In business production, what term identifies the cost of producing exactly one additional unit of a good?