Remember that Marginal Cost is the cost of increasing output by a single unit. Or, if output increases by more than one unit we can estimate MC by the change in cost divided by the change in output.
Another way to think of MC is that it is the change in costs due to a small change in output.
It should be clear that MC is a strictly variable cost. Remember that fixed costs are costs that do not change with output.
Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved