|Posted on April 14, 2014 at 8:30 PM|
Marginal costs are the most important costs that a firm faces because these costs help determine profit maximization at the margin. Marginal costs are the change in total costs resulting from a change in output (change in total costs/change in output). It's the additional cost of producing one more unit.
You can also estimate marginal costs by dividing the wage by marginal product (W/MP).
AP Microeconomics Unit 2 Product Markets