Okuzeka
Economics vocabulary · Markets, Supply and Demand

Marginal cost

Meaning in economics, with examples

nounCommon term

In economics, marginal cost means: The extra cost of producing one more unit of a good or service; a key idea when a firm decides how much to produce.

In Turkish: marjinal maliyet

How it is used

Central to microeconomics, where firms are assumed to produce until marginal cost equals marginal revenue. In economics, marginal means additional, not small or unimportant as in everyday English. Digital products often have a marginal cost close to zero.

Example sentences

  1. Once the software is written, the marginal cost of selling another copy is almost zero.

  2. A profit-maximising firm keeps producing until marginal cost equals marginal revenue.

Common collocations

  • marginal revenue
  • marginal benefit
  • rising marginal cost
  • marginal cost curve
  • supplyThe amount of a good or service that producers are willing and able to sell at each possible price during a given period.
  • diminishing returnsThe point at which adding more of one input, while the other inputs stay fixed, produces smaller and smaller increases in output.
  • competitionRivalry between firms that sell similar products and try to win the same customers, which tends to push prices down and quality up.
  • monopolyA market in which a single firm is the only seller of a product with no close substitutes, which gives it the power to set prices.
  • microeconomicsThe branch of economics that studies how individual households and firms make choices, and how prices are set in particular markets.

More terms: Markets, Supply and Demand

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This page explains English vocabulary for learners. It is not financial advice.