Marginal Cost & its Variation in Different Economy Scales
Journal Title: International Journal of Tax Economics and Management - Year 2019, Vol 2, Issue 2
Abstract
In economics, marginal cost is the change in the total cost that arises when the quantity produced is incremented by one unit; that is, it is the cost of producing one more unit of a good. Intuitively, marginal cost at each level of production includes the cost of any additional inputs required to produce the next unit. 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 fixed and thus have no marginal cost. For example, the marginal cost of producing an automobile will generally include the costs of labor and parts needed for the additional automobile and not the fixed costs of the factory that have already been incurred. In practice, marginal analysis is segregated into short and long-run cases, so that, over the long run, all costs (including fixed costs) become marginal.
Authors and Affiliations
Antônio Souza Araujo
Keywords
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- DOI 10.35935/tax/22.3429
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