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Glite Dictionary
differential cost

differential cost

6.9
The change in total cost when you produce one more or one less item
  • noun
  • /ˌdɪf.əˈrɛn.ʃəl kɔst/
  • Specialized
translation icon : costo diferencial
  • When deciding whether to increase production, businesses often analyze the differential cost of producing one more unit.

Examples

  • The accountant explained that the differential cost reflects the change in total expenses when output is adjusted by one item.

  • Understanding differential costs helps companies make informed decisions about pricing and production levels.

  • This might be the case given the differential costs and benefits of incorrectly concluding that an error versus a non-error has occurred.

    Academic text (1996)

  • However, all these agencies did have some idea of the differential costs in terms of repair costs and maintenance labor efforts between conventional dry well/wet well pumping stations and submersible pumping stations.

    Academic text (1998)

Synonyms

marginal cost
vsdifferential cost
  • Specialized
4 4.8

The extra cost to make one more item

is about both increases and decreases from producing one more or one fewer unit
incremental cost
vsdifferential cost
  • Specialized
1 4.9

The extra or less money needed to make one more product

is the identical concept expressed using a different technical term

Surface Forms

differential cost singular
differential costs plural

Morphology

differential + cost

The phrase is compositional: 'differential' signals a difference and 'cost' is the monetary amount, so a learner who knows both words can infer it means a difference/change in cost. Although the precise economic nuance (change from producing one more or one less unit) is technical, the basic idea of 'difference in cost' is transparently derivable and cross-linguistically common.

Etymology

Differential cost comes from the simple idea of comparing two small piles of coins: one shows the cost now and the other shows the cost if you make 'one more or one less item'. The extra coins between the piles are the differential in cost, so the term tells you how total cost will go up or down when you change how many items you make.