Nature Marginal analysis

The concept of marginal value is widely used in economic analysis, for example marginal utility, marginal cost and marginal revenue. Marginality concept assumes special significance where maximisation or maximization problem is involved e.g. maximization of consumer’s utility, maximisation of firm’s profit, minimization of cost etc. The terun “marginal” refers to the change (increase or decrease) in the total of any quantity due to one unit change in its determinant e.g. the total cost of production of a commodity depends on the number of units produced. In this case “marginal cost” or (MC) can be defined as the change in total cost as result of producing one unit less of a commodity thus,

Marginal Cost (MC) = TCn – TCn – 1­

Where TCn = total cost of producing n units

TCn-1 = total cost of producing n – 1 units.

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