Marginal Cost

Marginal Cost is the change in the total cost that arises when the quantity produced has an increment by unit. That is, it is the cost of producing one more unit of a good. In general terms, marginal cost at each level of production includes any additional costs required to produce the next unit. For example, if producing additional vehicles requires building a new factory, the marginal cost of the extra vehicles includes the cost of the new factory. In practice, this analysis is segregated into short and long-run cases, so that over the longest run, all costs become marginal. At each level of production and time period being considered, marginal costs include all costs that vary with the level of production, whereas other costs that do not vary with production are considered fixed.

Resource:

• Mankiw, N. Gregory. "Chapter 13:The Various Measures of Cost" Principles of Microeconomics. 6th ed. Mason, OH: Thomson/South-Western, 2004. 265-68. Print.
• "Marginal Cost." Wikipedia. Wikimedia Foundation, n.d. Web. 30 May 2015.