In economics, marginal cost refers to the additional cost incurred when producing one more unit of a good. What happens to the marginal cost if the production level increases beyond the optimal point?

When a company produces more than the optimal level of goods, the marginal cost usually increases. This happens because resources become limited and less efficient as production ramps up. For example, if a factory is running at full capacity and tries to produce more items, it might need to pay overtime wages or use more expensive materials, which raises the cost of making each extra item. As a result, the company may find that the extra money spent on production is not worth the additional goods they produce. Therefore, understanding marginal cost helps businesses decide the best level of production to maximize profits without overspending.