Marginal cost
Marginal cost (MC) is the cost of producing one additional unit, calculated as Change in Total Cost ÷ Change in Quantity (ΔTC ÷ ΔQ). MC represents the gradient of the total cost curve.
Real World
Rolls-Royce estimates the marginal cost of one extra Trent XWB jet engine at around £5 million, reflecting the additional titanium, labour hours, and testing each unit requires.
Exam Focus
State that MC crosses AVC and AC at their minimum points — this intersection is frequently tested in MCQs.
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