Marginal cost (MC) is the additional cost incurred by producing one more unit of a good or service. It is the cost of producing an additional unit of output, given the fixed costs and variable costs already incurred. In other words, it is the cost of the next unit of production. Marginal cost is important because it helps businesses determine the optimal level of production, where the cost of producing one more unit is equal to the additional revenue generated by selling that unit. By understanding marginal cost, businesses can make informed decisions about pricing, production levels, and profitability.