Marginal cost of production is an economic measurement that looks at the change in total cost that comes with increasing production output by one unit. In other words, it’s a calculation of how much more it costs to make just one extra item. It’s important for businesses to understand their marginal cost of production in order to maximize efficiency and increase potential profits. When setting prices, businesses should aim to cover their marginal cost of production – plus a little extra – as this will ensure they maintain profitability in the long run.