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Top 10 facts about the world. Marginal cost and total cost are related in terms of the cost of production for manufacturing companies or service providers. Fixed costs and marginal variation in cost are both considered when determining the total cost, so total costs encompass marginal costs. The average total cost will generally decrease to a minimum before increasing, forming a U-shape.
Lesson Summary. Marginal cost is the increase or decrease in total production cost if output is increased by one more unit. The formula to obtain the marginal cost is change in costs/change in quantity.ey Concepts of Marginal Costs. Marginal cost is the increase or decrease in the total cost a business will incur by producing one more unit of a product or serving one more customer.