Marginal cost is the cost of producing one more unit of a product. If you’re making T-shirts, the marginal cost would be the cost of making one additional T-shirt. It helps businesses decide whether producing more of something is worth the extra cost. For example, if it costs a company ₹100 to produce 10 units of a product, and it costs ₹110 to produce 11 units, the marginal cost of the 11th unit is ₹10.