Marginal Cost refers to the additional cost incurred when producing one more unit of a good or service. It helps businesses determine how much it will cost to increase production and is crucial for making pricing and production decisions. Understanding marginal cost allows companies to assess whether producing more is financially beneficial. Calculating marginal cost involves taking the change in total cost that results from producing an extra unit and dividing it by the change in the quantity produced. This concept is essential in economics and is used by firms to optimize their production levels and maximize profits.