Marginal Cost Calculator

Formula

The formula to calculate Marginal Cost (MC) is:

\[ \text{MC} = \frac{\text{CVC}}{\text{CQ}} \]

Where:

$ \text{MC} $ is the marginal cost
$ \text{CVC} $ is the change in total variable costs
$ \text{CQ} $ is the change in quantity

What is Marginal Cost?

Marginal cost refers to the cost of producing one additional unit or the cost change per unit. It is the total cost that occurs when increasing production by one unit. Unlike the simple cost per unit, marginal cost considers additional factors such as the need for new machinery or operators when production capacity is exceeded.

Example Calculation

Let's assume the following values:

Change in Total Variable Costs (CVC) = $500
Change in Quantity (CQ) = 50 units

Using the formula to calculate Marginal Cost:

\[ \text{MC} = \frac{500}{50} = 10 \]

The Marginal Cost (MC) is $10 per unit.