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Marginal Cost - Group 4
Transcript of Marginal Cost - Group 4
Average total cost (ATC) tells us the cost of a
typical unit of output if total cost is divided
evenly over all the units produced.
ATC= total cost/quantity = TC/Q Marginal cost Marginal cost (MC) is the increase in total
cost when produce one more unit.
MC= (change in total cost) / (change in quantity) Relationship between
MC and ATC Whenever MC is less than ATC, ATC is falling.
Whenever MC is greater than ATC, ATC is rising This relationship between ATC and MC has an important
corollary: The MC curve crosses the ATC curve at the
efficient scale Rising marginal cost Group 4 The end Thank for your attention Marginal Cost =
(following total cost) - (previous total cost)