In economics, the practice of setting a product's price equal to the additional (marginal) cost of producing one more unit of output. The producer charges an amount equal to the cost of the additional economic resources. The policy is used to maintain a low selling price or to keep a business operating during a period of poor sales. Because fixed costs such as rent and building maintenance must be paid whether a company produces or not, a firm experiencing temporary difficulties may decide to remain in production and sell the product at marginal cost, since its losses will be no greater than if it ceased production.

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In economics, the additional satisfaction or benefit (utility) that a consumer derives from buying an additional unit of a commodity or service. The law of diminishing utility implies that utility or benefit is inversely related to the number of units already owned. For example, the marginal utility of one slice of bread offered to a family that has five slices will be great, since the family will be less hungry and the difference between five and six is proportionally significant. An extra slice offered to a family that has 30 slices will have less marginal utility, since the difference between 30 and 31 is proportionally smaller and the family's appetite may be satisfied by what it already has. The concept grew out of attempts by 19th-century economists to explain the fundamental economic reality of price.

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In economics, the theory that firms will pay a productive agent only what he or she adds to the financial earnings of the firm. Developed by writers such as John Bates Clark and Philip Henry Wicksteed at the end of the 19th century, marginal productivity theory holds that it is unprofitable to buy, for example, a man-hour of labour if it costs more than it contributes to its buyer's income. The amount in excess of costs that a productive input yields is the value of its marginal product; the theory posits that every type of input should be paid the value of its marginal product.

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