A25-Marginal Product and Marginal Cost


-fixed costs

-variable costs

-total costs

-average costs

-marginal costs*

In the final analysis, these costs are opportunity costs and involve forgoing the opportunity to produce alternative goods and services. These costs depend on how efficient the production process is. The efficiency of the production process is affected by the law of diminishing marginal returns.

This activity shows how the law of diminishing marginal returns affects production and how changes in productive efficiency affect costs.