What Is Marginal Costing?

In economics and finance, marginal cost refers to the increase in the total cost of each unit of newly produced product (or purchased product). This concept shows that the cost per unit of product is related to the total product volume. For example, the cost of producing only one car is extremely large, while the cost of producing the 101st car is much lower, and the cost of producing the 10,000th car is even lower (this is because of the benefits of economies of scale) . However, considering the opportunity cost, as the production volume increases, the opportunity cost may also increase. Let's take this example as well. When producing a new car, the materials used may be more useful, so it is necessary to produce the most cars with the least amount of materials, so as to increase the marginal revenue. The marginal cost is abbreviated as MC or MPC.

marginal cost

Marginal cost: The cost increase resulting from an additional unit of output is called marginal cost. By definition, the marginal cost is equal to

Marginal cost function is to study the law of cost change and cooperate

The marginal cost is different from the average unit cost. The average unit cost considers all products, while the marginal cost ignores the product before the last product. For example,

Use marginal cost method to obtain information

In short, the marginal cost method acts as

"China Daily" reported:

Energy-related industries will have to face incremental costs to improve their carbon efficiency, but ultimately, such incremental costs will have to be shouldered by the consumers ,.

In order to improve carbon use, energy-related industries will increase marginal costs, but eventually these marginal costs will be transferred to consumers.

After China announced the carbon emissions target, relevant experts are studying the increased incremental cost and how to improve energy efficiency. At present, most industries still use fossil fuel (fossil fuel), so China is studying to increase carbon tax (carbon tax, soot emission tax), encourage the public to switch to low-carbon lifestyle (low-carbon lifestyle), and energy-saving appliances (Energy-saving appliances) financial subsidies.