When a firm is producing the quantity where the price is equal to the marginal cost of producing additional goods, it is known as allocative efficiency.
How do you explain marginal cost?
The additional cost to create each additional unit is referred to as marginal cost. For instance, ten cups of coffee might cost $10 to produce. Another would cost $0.80 to produce. As a result, that is the marginal cost, or the extra expense incurred to generate one additional unit of output.
What does the marginal cost formula?
Total Cost of Production minus Total Cost of Production of a Standard Unit equals Change in Total Cost. Change in Quantity is calculated as Total Quantity Product minus Total Quantity Product of Additional Unit.
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