Marginal Cost Calculator (change in cost ÷ change in output)

Understanding the marginal cost calculator — concept and principle

This calculator finds marginal cost, the cost of each extra unit over a range of output, from total cost at two output levels. It also shows the changes in output and cost, the average cost at each level and, with a selling price, whether the extra output adds profit. Economics students and producers deciding whether to take on more volume use it.

Cost of the extra 200 units — with the default inputs: $38.00 per unit.

How it is calculated

Marginal cost MC = (TC2 − TC1) ÷ (Q2 − Q1)
Change in output = Q2 − Q1; change in total cost = TC2 − TC1
Average cost at each level = total cost ÷ quantity
Price minus marginal cost = P − MC
Profit change from the extra output = P × ΔQ − ΔTC

The principle

Fixed costs do not change with output, so the change in total cost between two output levels comes only from variable costs. Dividing that change by the extra units gives the cost of each additional unit over the range. Marginal cost drives short-run decisions: if a unit sells for more than it costs to make, producing it adds profit, whatever the fixed costs. When MC is below average cost, producing more pulls the average down; when it is above, it pulls the average up.

Worked example

Defaults: 1,000 units cost 52,000; 1,200 units cost 59,600; price 45.

ΔQ = 1,200 − 1,000 = 200; ΔTC = 59,600 − 52,000 = $7,600.
MC = 7,600 ÷ 200 = $38.00.
Average cost: 52,000 ÷ 1,000 = $52.00 at the first level; 59,600 ÷ 1,200 = $49.67 at the second.
Price minus MC = 45 − 38 = $7.00.
Profit change = 45 × 200 − 7,600 = $1,400.

Each point is the calculator re-run with only “Total cost at the second level” changed; the gold point is the default example. Change the inputs above and this chart follows your numbers.

Total cost at the second level	Marginal cost per unit
14,900	-$185.50
29,800	-$111.00
44,700	-$36.50
59,600	$38.00
74,500	$112.50
89,400	$187.00
119,200	$336.00

How to read the result

MC of 38 is below the average cost of 52, so the extra output lowers the average, and below the price of 45, so it adds profit. Note that the price is below average cost: if the firm sold everything at 45 it would not cover all its costs, yet the extra 200 units still help. This is why marginal and average cost answer different questions.

Common mistakes

Dividing total cost by total output, which gives average cost, not marginal cost.
Including fixed costs that change only because of a one-off decision.
Applying an MC measured over one range to a very different output level.
Ignoring capacity limits that make costs jump.

Keep in mind: Marginal cost changes with output. The figure is an average over the range entered and may not hold for larger changes.

Frequently asked questions

What is the difference between marginal and average cost?

Marginal cost is the cost of one more unit; average cost is total cost divided by all units.

Can marginal cost be lower than average cost?

Yes. When it is, producing more lowers the average.

Why do fixed costs not affect marginal cost?

They are the same at both output levels, so they cancel out in the change.

Sources: OpenStax, Principles of Economics, 3rd ed. (2022), section 7.2 "The Structure of Costs in the Short Run"

Checked 9 Nov 2026. OpenStax, “Principles of Economics”, 3rd ed. (2022), chapter “Production, Costs, and Industry Structure”, section “The Structure of Costs in the Short Run” (marginal cost = Δ total cost ÷ Δ quantity; average total cost = total cost ÷ quantity).

Your numbers