Marginal Cost (MC):

Marginal Cost (MC) is change in to total cost (TC) as a result of a unit change in output. It is generally defined as the addition to TC resulting from an additional unit of output produced. It is measured as:

Where TC means change in total cost i.e. New TC minus Old TC and QΔmeans change in quantity of output, i.e. New Q minus Old Q. The sum of MCs up to a given level of output gives the TC of that level of output. i.e.,

TC = ∑MC

Table is a hypothetical short-run costs schedule. Column 1 is the quantities of output produced (Q). Column 2 depicts TFC which is constant. It is c800 at every level of output. Column 3 shows TVC increases from c0 to c3400. Column 4 depicts TC (TFC + TVC) which also increases from c800 to c4200 as output increases from 0 to 10 units, AFC declines from c800 to c80. Columns 6, 7 and 8 show AVC, ATC and MC respectively. All of these three curves initially decline to a minimum before rising again. For instance, MC initially declines form c600 (when output is 1 unit) to a minimum of c100 (when output is 5 units) before rising again to c600 at output level of 10 units.