Marginal production cost refers to the additional cost incurred by a company to produce one additional unit of a product or service. This cost includes the direct expenses such as labor, materials, and overhead, as well as the indirect costs such as transportation and marketing. It is a crucial factor in determining the profitability of a product or service, as it helps businesses make informed decisions about pricing and production levels. Essentially, marginal production cost measures the impact of producing one more unit on the overall cost structure of a company.