Respuesta :
If a company has a complete monopoly in the market and can sell 4 units of production for $2.00 each and 5 units for $1.75 each, it will create and sell the fifth unit if its marginal cost is less than $0.75.
Why is marginal cost so crucial?
In essence, marginal cost is the price of producing an additional unit of a good or service. There are two distinct categories of expenses to be aware of while looking at the income statement. You do have fixed costs, though. These are typically substantial costs that remain constant regardless of how many units you produce.
Is a low marginal cost desirable?
A lower fixed cost of operation for a company at a given production volume is indicated by a lower marginal cost of production. Increases in production may not be in the best interests of the company if the marginal cost of production is high and the expense of doing so is high as well.
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