Marginal Costs

Marginal costs refer to the additional expense incurred when producing one more unit of a good or service. Within the context of Cost Benefit Analysis, understanding marginal costs helps decision-makers evaluate whether the benefits of increasing production or service delivery outweigh the extra costs. This assessment is crucial for determining optimal resource allocation and ensuring that investments lead to meaningful improvements without unnecessary spending. By comparing marginal costs to the expected benefits, organizations can make informed choices that maximize overall value.