jaðarkostnaðurinn
Jaðarkostnaðurinn is the Icelandic term for marginal cost, the additional cost incurred by producing one more unit of output. It is a central concept in microeconomics and is defined as the change in total cost when output changes by one unit. The term combines jaðar-, edge or margin, with kostnaður, cost.
Calculation: MC = ΔTC/ΔQ. When output changes in discrete steps, MC is the change in total cost divided
Typical behavior: MC often rises as output increases due to diminishing returns to the variable inputs in
Role in decision making: Firms use marginal cost to determine optimal production levels, pricing, and to analyze
Limitations and notes: MC assumes other factors are held constant and may be unstable in the short
See also: fixed cost, variable cost, average cost, marginal revenue, supply.