marginal cost


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marginal cost

An actuarial term referring to the additional cost required to produce an additional unit of benefit (e.g., unit of health outcome).
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First, using the example of a bridge, the marginal cost of using a bridge is effectively zero only until some capacity constraint is reached.
In future work it would be interesting to perform a similar study for electricity, another market characterized by high fixed costs and low marginal costs.
Then from equation (4) we find the marginal cost of the supplier,
A review of cost estimates for different lightweighting and energy efficiency measures is now presented, an attempt to fit representative marginal cost functions for them is made, and the methodology derived in this paper to find the optimal combinations of lightweighting and efficiency improvement is demonstrated and tested.
To illustrate how this phenomenon affects the calculation of the marginal cost of public funds, because the 10 percent tax rate increase generates only an 8 percent increase in tax revenue, the cost of raising that last, or marginal, dollar of tax revenue is 10/8, or 1.
To understand how the coefficient on the marginal cost measure in Equation (9) depends on the proxy for expected inflation, notice that k can be written as:
Loosely speaking, monetary policy affects inflation through its effects on marginal cost.
Fourth, real marginal cost and not the output gap is the factor affecting inflation.
The first issue elaborated on is the general similarity that exists between a profit-maximizing ppm marking up marginal cost to determine the optimal price to charge consumers, and a profit-maximizing rpm marking down marginal revenue product to determine the wage to offer workers, labor assumed to be the firm's one variable resource.
Economic models suggest that firms should produce where marginal cost is equal to marginal revenue (Awh 1976, Kamerschen and Valentine 1977), regardless of the market type.
The accountant will argue that the suppler B should be the supplier of choice; but if the extra 1000 tons of paper made with supplier A is calculated at marginal cost, suddenly the picture changes.

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