what is an example of marginal cost 
imagine a company that manufactures high quality exercise equipment the company incurs both fixed costs and variable costs and has additional capacity to manufacture more goods let s say it has cost the company 500 000 to manufacture 1 000 exercise bikes the company has determined it will cost an additional 400 to manufacture one additional bike although the average unit cost is 500 the marginal cost for the 1 001st unit is 400 the average and marginal costs may differ because some additional costs i e fixed expenses may not be incurred as additional units are manufactured 