What is the additional cost incurred from producing one more unit of a good?

The additional cost incurred from producing one more unit of a good is termed "marginal cost." This concept is crucial in economics as it helps businesses and economists determine the cost-effectiveness of increasing production levels. Marginal cost is calculated by assessing the change in total cost that arises when the quantity produced is increased by one unit. This figure allows companies to make informed decisions on whether to increase production based on the costs involved and to determine the potential impact on profitability.

In the context of economic production, understanding marginal cost is essential for determining optimal output levels. It influences pricing strategies, production decisions, and overall resource allocation. For instance, if the marginal cost of producing another unit is less than the selling price of that unit, it would be economically beneficial to increase production.

This understanding distinguishes it from the other concepts provided. Marginal analysis involves comparing the additional benefits and costs of different choices, opportunity cost refers to the value of the next best alternative foregone when making a decision, and production cost encompasses the total expenses related to manufacturing goods, rather than the change associated with producing one more unit.