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If average total cost is decreasing as more and more units are produced then marginal cost must be?
Wiki User
∙ 9y ago
Going up as well. You will be making more money because you are spending less while still selling at the same price.
Wiki User
∙ 9y ago
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When marginal cost is less than the average total cost the average total cost is falling why?
as a marginal cost is the cost of the next product produced, if this is less than average cost, when you continue to produce more products the lower marginal cost will have an affect on the average and cause it to fall.
Relationship between marginal cost and average total cost?
The cost curves best tells us the relationship between the marginal cost and average total cost. The average fixed cost (AFC) curve will decline as additional units are produced, and continue to decline.
How do you calculate marginal cost?
Given the data on fixed and marginal Costs we require the number of units produced to ascertain the Average Total cost, from the MC we an get the TC but to calculate ATC we need the data on total quantity produced
6 If the average total cost curve is falling what is necessarily true of the marginal cost curve If the average total cost curve is rising what is necessarily true of the marginal cost curve?
When average total cost curve is falling it is necessarily above the marginal cost curve. If the average total cost curve is rising, it is necessarily below the marginal cost curve.
How does a monopolistically competitive firm determine its profit-maximizing price?
price = marginal revenue. marginal revenue > average revenue. price > marginal cost. total revenue > marginal co
When marginal cost is less than the average total cost the average total cost is falling why?
as a marginal cost is the cost of the next product produced, if this is less than average cost, when you continue to produce more products the lower marginal cost will have an affect on the average and cause it to fall.
Relationship between marginal cost and average total cost?
The cost curves best tells us the relationship between the marginal cost and average total cost. The average fixed cost (AFC) curve will decline as additional units are produced, and continue to decline.
How do you calculate marginal cost?
Given the data on fixed and marginal Costs we require the number of units produced to ascertain the Average Total cost, from the MC we an get the TC but to calculate ATC we need the data on total quantity produced
Relationship between Tota Product Marginal Product and Average Product?
Average Product = (Total Product) / (Labor) Marginal Product(2) = (Total Product)(2) - (Total Product)(1)
6 If the average total cost curve is falling what is necessarily true of the marginal cost curve If the average total cost curve is rising what is necessarily true of the marginal cost curve?
When average total cost curve is falling it is necessarily above the marginal cost curve. If the average total cost curve is rising, it is necessarily below the marginal cost curve.
Why average cost increase when marginal cost is increasing?
Marginal cost = derivative of (Total cost/Quantity) Where Total cost = fixed cost + variable cost Marginal cost = derivative (Variable cost/Quantity) (by definition, fixed costs do not vary with quantity produced) Average cost = Total cost/Quantity The rate of change of average cost is equivalent to its derivative. Thus, AC' = derivative(Total cost/Quantity) => derivative (Variable cost/Quantity) = MC. So, when MC is increasing, AC' is increasing. That is, when marginal cost increases, the rate of change of average cost must increase, so average cost is always increasing when marginal cost is increasing.
When to use marginal costing?
Marginal costing is the method of costing for evaluating the changes in total cost due to change in number of units produced.
What does marginal costs mean?
In economics and finance, marginal cost is the change in total cost that arises when the quantity produced changes by one unit
When average product is highest Options Total product is maximum Marginal product is maximum Marginal product is zero Marginal product is negative?
Negative
Why does marginal utility decrease?
Law of diminishing marginal utility states that equal additions to a good provide smaller and smaller increases in total utility, therefore marginal utility decreases. Lets use apples for an example. The first apple is very satisfying and adds a lot of utility, say 100 total utility. If you have a second apple, it is less satisfying, and adds 80 to make 180 total utility. A third apple adds only 50 utility, to make 230 total. Total utility is increasing at a decreasing rate. Therefore, the marginal utility (satisfaction) between each apple is decreasing, which illustrates the law of diminishing marginal utility.
How does a monopolistically competitive firm determine its profit-maximizing price?
price = marginal revenue. marginal revenue > average revenue. price > marginal cost. total revenue > marginal co
How does a firm calculate marginal cost?
In economics and finance, marginal cost is the change in total cost that arises when the quantity produced changes by one unit.
