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Chapter 7 the cost of production notes accounting cost actual expenses plus depreciation charges for capital equipment economic cost cost to a firm of utilizing economic resources in production, including opportunity cost. N when estimating future probability of business, economists and managers are concerned with capital cost of plant and machinery. N this cost involves not only monetary outlay for buying and running the machinery, but also the cost associated with wear and tear. N marginal cost (mc) increase in cost resulting from the production of one extra unit of output; mc = vc / q = tc / q. N user cost of capital = economic depreciation + (interest rate) (value of capital) N user cost of capital annual cost of owning and using a capital asset, equal to economic depreciation plus forgone interest r = depreciation rate + interest rate. Mrts = k / l = mpl / mpk.

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