Part 3: Marginal Revenue (MR)The Dictionary of Economics Terms defines marginal cost as:
- Marginal costs are the costs a company incurs in producing one additional unit of a good.
Since we have the figures for total costs, we can easily calculate the marginal cost from producing 2 goods instead of 1. It is simply:
MC(2nd good) = TC(2 goods) - TC(1 good)Here the total costs from producing 2 goods is $12 and the total costs from producing only one good is $10. Thus the marginal cost of the second good is $2.
When you've done this for every quantity level, your chart should look similar to the one below.