Question

Difference between average cost and marginal cost in economics

Answer 1

average cost and/or unit cost is equal to total cost (TC) divided by the number of goods produced (the output quantity, Q). It is also equal to the sum of variable costs (total variable costs divided by Q) plus average fixed costs (total fixed costsdivided by Q).

economics, marginal cost is the change in the opportunity cost that arises when the quantity produced is incremented by one unit, that is, it is the cost of producing one more unit of a good.

Answer 2

Average cost is total cost divided by no. of units
it shows average of all the costs

However, Marginal cost refers to additional cost incurred due to change in output

Example: Total cost = 100 and output = 10
Average cost = 100/10 = 10

but Marginal cost would be calculated by using two levels say
Total cost when output = 10 is 100
When output = 11 is 120

So Marginal cost = (120-100)/(11-10) = 20