Marginal Cost is the change in the total production cost that is the increase or decrease in the total cost of producing one additional unit of a product. The Marginal Cost is variable costs consisting of an estimated portion of fixed costs including direct variable labour and material costs.
Reference Definition by Economicsonline.co.uk: Marginal Cost is the additional cost incurred in the production of one more unit of a good or service. It is derived from the variable cost of production, given that fixed costs do not change as output changes, hence no additional fixed cost is incurred in producing another unit of a good or service once production has already started. Marginal cost is significant in economic theory because a profit maximising firm will produce up to the point where marginal cost (MC) equals marginal revenue (MR).
Related Definitions in the Project: The Project Cost
