Encyclopedia of Operations Research and Management Science

2001 Edition
| Editors: Saul I. Gass, Carl M. Harris

Marginal value (COST)

  • Saul I. Gass
  • Carl M. Harris
Reference work entry
DOI: https://doi.org/10.1007/1-4020-0611-X_576

The marginal value is the extra cost of producing one extra unit of output. Similarly, marginal revenue is the extra revenue resulting from selling an extra unit of goods. From the economics of a firm, when marginal revenue equals marginal costs, the firm is in an equlibrium optimal condition in terms of maximizing profits. Depending on the application, the dual variables of a linear-programming problem can be interpreted as marginal values. The economic interpretation of the dual variables is complicated by alternate optimum solutions (corresponding to different bases) that may yield different values of the dual variables. Thus, there may be two or more marginal values for the same constraint. Such multiple values must be interpreted with care. Dual problem; Duality theory.

Copyright information

© Kluwer Academic Publishers 2001

Authors and Affiliations

  • Saul I. Gass
    • 1
  • Carl M. Harris
    • 2
  1. 1.Robert H. Smith School of BusinessUniversity of MarylandCollege PartUSA
  2. 2.School of Information Technology & EngineeringGeorge Mason UniversityFairfaxUSA