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How to calculate Marginal cost

The Marginal cost formula, with plain worked examples you can check yourself.

Marginal cost = ΔTC ÷ ΔQ

Worked examples

ΔTC = 1000 · ΔQ = 100Marginal cost = 10
ΔTC = 500 · ΔQ = 100Marginal cost = 5
ΔTC = 120 · ΔQ = 10Marginal cost = 12

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Costs & Break-even.

Related terms

Marginal costFixed costsVariable costsCost of goods soldOverheadDepreciation

Practice Marginal cost with real numbers

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