Marginal cost calculator
This marginal cost calculator finds the extra cost of each additional unit. Example: if total cost rises from 1,000 at 100 units to 1,180 at 120 units, marginal cost is 9 per unit.
Example: Quantity 1 100 · Total cost at quantity 1 1,000 · Quantity 2 120 · Total cost at quantity 2 1,180 → Marginal cost: Marginal cost = 9 per unit. Source: Mankiw: Principles of Economics – The Costs of Production (Marginal Cost). Updated: .
How it is calculated
Marginal cost is the cost of producing one additional unit. It shows how much total cost rises when quantity grows by one unit and is a core idea in cost theory.
Formula
Marginal cost = change in total cost ÷ change in quantity = (C₂ − C₁) ÷ (Q₂ − Q₁). Fixed costs do not change with quantity, so they drop out of the difference; the variable costs decide. Average cost is C ÷ Q.
Example
At 100 units total cost is 1,000, at 120 units 1,180. The change in cost is 180, the change in quantity 20, so marginal cost is 180 ÷ 20 = 9. Average cost falls from 10 to 9.8333 because marginal cost lies below the earlier average cost.
- For large jumps in quantity the value is an average over the interval, not an exact value at one point.
- At quantity 0 average cost is not defined.
Frequently asked questions
How do you calculate marginal cost?
Change in cost divided by change in quantity. With 180 and 20 that is 9 per unit.
What is the difference between marginal cost and average cost?
Average cost is total cost divided by quantity (here 10 at 100 units); marginal cost covers only the extra units (9).
Why do fixed costs not matter?
Because they are the same at both quantities and cancel out in the difference. Only costs that grow with quantity determine marginal cost.
Sources and legal basis
- Mankiw: Principles of Economics – The Costs of Production (Marginal Cost)
- Wikipedia – Marginal cost
- Wikipedia – Grenzkosten
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