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Marginal Cost definitions

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  • Marginal Cost
    The extra expense incurred from producing one additional unit, calculated by dividing the change in total cost by the change in output.
  • Total Cost
    The sum of all expenses, including both fixed and variable, required to produce a given quantity of goods.
  • Variable Cost
    The portion of total expenses that changes directly with the level of output, such as wages for additional workers.
  • Fixed Cost
    The portion of total expenses that remains unchanged regardless of output, like the daily cost of pizza ovens.
  • Marginal Product of Labor
    The increase in output resulting from hiring one more worker, reflecting the productivity of additional labor.
  • Diminishing Marginal Productivity
    The phenomenon where adding more workers eventually leads to smaller increases in output, raising extra production costs.
  • U-Shaped Curve
    A graphical pattern where a cost measure first declines, reaches a minimum, and then rises as output increases.
  • Quantity
    The total number of units produced within a given period, used to measure changes in output.
  • Output
    The total amount of goods produced by a firm, often measured in units like pizzas in examples.
  • Aggregate Supply
    The total quantity of goods and services that producers in an economy are willing to supply at a given overall price level.
  • Aggregate Demand
    The total quantity of goods and services demanded across all levels of an economy at a given overall price level.
  • Wage
    The payment made to workers for their labor, often a key component of variable expenses in production.
  • Cost Behavior
    The way in which total expenses change as output levels vary, crucial for production and employment decisions.