Differential Cost (Noun)
Meaning
The increase or decrease in costs as a result of one more or one less unit of output.
Classification
Nouns denoting attributes of people and objects.
Examples
- The factory calculated the differential cost of producing an additional 100 units of the product to decide whether to increase production.
- The company considered the differential cost of hiring one more employee to determine if it would lead to increased profits.
- Economists use the concept of differential cost to analyze how changes in production levels affect a company's overall costs.
- To determine the optimal production level, the manager needed to analyze the differential cost of producing each additional unit of the product.
- The differential cost of carrying one more student in a class versus establishing a new class was a critical consideration for the school administration.