What are Marginal Costs? Price isn't the only factor to consider. Marginal cost is the production-side counterpart to marginal revenue – how much it will cost to produce that added unit.

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The marginal cost of production and marginal revenue are economic measures used to determine the amount of output and the price per unit of a product that will maximize profits.

To calculate the marginal tax rate on the investment, you'll need to figure out the additional tax on the new income. In this example, $500 will be taxed at 15% and $500 at 25%.