How To Calculate Marginal Cost?

Identify the total cost function (C(q)) (or a cost table for different quantities)

Compute marginal cost as the change in total cost from producing one more unit:

(MC(q)=Delta C / Delta q)

If using discrete quantities:

(MC(q)=dfrac{C(q+Delta q)-C(q)}{Delta q})

If (Delta q=1) (one unit increase):

(MC(q)=C(q+1)-C(q))

If using a continuous cost function:

(MC(q)=dfrac{dC(q)}{dq})

If the cost function is given with parameters:

Differentiate with respect to (q) and substitute the desired (q) value

Use the resulting (MC) value for the specific output level you need (e.g., (q), (q+1), or a point estimate)

Suggested for You

Trending Today