In fact, we believe that when the great gold selloff occurs and production is taken off line the marginal cost of production will decline as the least efficient mines are closed first.
As gold prices rose, less efficient mines became viable and drove up the marginal cost of production.
The rush was on to take advantage of this price arbitrage that provided almost monopolistic prices, and only marginal costs of production.
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Or rather, to be more accurate, the marginal cost to the consumer closer to the marginal cost of production for the producer.
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However, aside from copper, many of the base metals have already fallen near their marginal cost of production, which should provide a floor, Bhar added.
Platinum is likely approaching the so-called marginal cost of production, which can trigger output cuts in any commodity, said David Wilson, director of metals research at Societe Generale.
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Time tested economic theory tells us that in a free, unfettered market not constrained by onerous barriers to entry, the long term price of a commodity will approach its marginal cost of production.
Determining the actual marginal cost of production is somewhat tricky since the commodity is priced globally in dollars, but the bottom lines for South African mining companies are ultimately determined by the price they receive in South African rand, with their expenses also paid in rand.
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Much of the development cost of a new drug is paid by the US market (yes, this is why you pay higher prices than most Europeans do) meaning that as long as drugs in, say, Greece are sold at above the marginal cost of production they still make a profit.
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Chesapeake has curtailed its drilling in some plays, and in January said it would shut in production of marginal gas fields.
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This marginal reasoning explains why Kuwait, which is renowned for its oil reserves, still has imports at some point, the marginal cost of domestic production is more expensive than the world price.
Lower marginal tax rates increase incentives for production.
Or if you prefer, the marginal cost of one more unit of production is near zero.
Pursuing such a vision would require very high marginal tax rates on anyone with above average production, income and wealth, which experience as well as theory shows us leads to less production.
That increased productivity enables workers to earn higher wages, as wages in a competitive market equal the marginal productivity of labor (what the worker adds to production).
Expanding production in Argentina or America takes you into drier marginal lands which are much more expensive to farm.
At a 50% marginal tax rate, the producer can keep only half of any increased production.
At some level of output their marginal costs rise as they begin paying overtime or putting their less efficient facilities into production.
These formulas look at the organization as the sole beneficiary of the value created that may be doled out later to the participants in the production process of the good (all the people and resources that contribute to the Marginal cost).
Noting Ford's close relationship with Nippon Steel, Mr Polites said the marginal cost of importing from Japan was "a hell of a lot less than losing a couple of days of production".
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