When deciding on how much oil to pump from a well, oil companies look at the extra cost of producing an additional barrel of oil. This extra cost is known as

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Marginal cost refers to the cost of producing one additional unit of a product, in this case, an additional barrel of oil. This is what companies consider when deciding how much oil to pump, as it helps them understand the cost implications of increasing production.

When Deciding on How Much Oil to Pump from a Well