Interpreting the Marginal Cost Curve

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Marginal cost is the additional cost to produce one extra unit of a product. On the contrary, average cost is the cost per unit manufactured. It is calculated by dividing the total cost of production by the total units manufactured. Marginal cost reflects the cost of only one unit, while average cost reflects all units produced.

There is a direct relationship between the two, when the average cost of production increases, it depicts the marginal cost is greater than the average cost. However, if the average cost decreases, it signifies that the marginal cost is less than the average cost. If there is no change in the marginal cost, it will be equal to the average cost.

It is important to know that the more the production process streamlines or latvia phone number list economies of scale are achieved, the marginal cost will decrease. However, there will be a point when producing additional units may become expensive.


The Marginal Cost Curve depicts the relation between marginal costs incurred and the total quantity of output. It shows the marginal cost of producing different amounts of products. Marginal cost curves are typically U-shaped. Let us understand how it is graphically represented by looking at the image below.