what is marginal profit 
marginal profit is the profit earned by a firm or individual when one additional or marginal unit is produced and sold marginal refers to the added cost or profit earned with producing the next unit marginal product is the additional revenue earned while the marginal cost is the added cost for producing one additional unit marginal profit is the difference between marginal cost and marginal product also known as marginal revenue marginal profit analysis is useful for managers because it aids in deciding whether to expand production or to slow down stop production altogether a moment known as a shutdown point under mainstream economic theory a company will maximize its overall profits when marginal cost equals marginal revenue or when marginal profit is exactly zero understanding marginal profitmarginal profit is different from average profit net profit and other measures of profitability in that it looks at the money to be made on producing one additional unit it accounts for the scale of production because as a firm gets larger its cost structure changes and depending on economies of scale profitability can either increase or decrease as production ramps up economies of scale refer to the situation where marginal profit increases as the scale of production is increased at a certain point the marginal profit will become zero and then turn negative as scale increases beyond its intended capacity at this point the firm experiences diseconomies of scale companies will thus tend to increase production until marginal cost equals marginal product which is when marginal profit equals zero in other words when marginal cost and marginal product revenue is zero there s no additional profit earned for producing an added unit if the marginal profit of a firm turns negative its management may decide to scale back production halt production temporarily or abandon the business altogether if it appears that positive marginal profits will not return 