Word: Incremental Cost
Definition:
Incremental cost is a noun that refers to the change in the total cost that results from producing one additional unit of a product or service, or conversely, the cost saved by producing one less unit. Essentially, it looks at how costs increase or decrease when the level of production changes slightly.
Usage Instructions:
You can use "incremental cost" when discussing business decisions, budgeting, or economics, especially when you need to analyze the financial impact of producing more or fewer items.
Example Sentence:
"When deciding whether to increase production, the manager calculated the incremental cost of producing one more unit to see if it was worth it."
Advanced Usage:
In advanced discussions, you might encounter concepts related to incremental cost such as "marginal cost," which is often used interchangeably but can have slightly different applications in economics.
Word Variants:
- Increment (noun) - the amount by which something increases.
- Incrementally (adverb) - in small steps or stages.
Different Meaning:
While "incremental cost" specifically refers to production costs, "incremental" alone can mean gradual or step-by-step changes in various contexts, not just in finance.
Synonyms:
- Marginal cost - Additional cost - Variable cost (though this can have a broader meaning)
Idioms and Phrasal Verbs:
There aren’t specific idioms or phrasal verbs that directly include "incremental cost." However, you might hear phrases like "cutting costs" or “weighing costs,” which relate to the idea of evaluating expenses.
Summary:
Incremental cost is a useful term in business and economics that helps us understand the financial implications of small changes in production.