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Marginal versus variable costing?
Variable cost refers to the TOTAL variable cost of all units, whereas marginal cost is the variable cost of the last unit only. Variable cost is the sum of all the individual marginal costs. The derivative of the Variable Cost is the Marginal Cost. The integral of the Marginal cost is the Variable Cost.
What is happening to average variable costs when they equal marginal costs?
When average variable costs equal to the average marginal cost, the average variable cost will be at the minimum point. i.e. lowest cost
When the marginal cost is less than the average variable cost the average variable cost will?
decrease. Think about it this way, if you have a room full of people and you get their average height(average variable cost), and now each person that walks into the room(marginal cost) is shorter than the average, the average will drop.
What is the relationship between Average variable cost Average fixed cost and marginal cost?
we can subtract the AVC and we will get the MC
Relationship between marginal cost and the supply curve for a purely competitive firm?
Marginal cost curve above the average variable cost curve, is the same as the short run supply curve. In perfect competition, MC=Price. It follows that production will be at that point. Hence the supply curve is the same as that part of the MC curve which is above AVC, where the firm can cover its variable cost....this is better than shutting down.
Marginal versus variable costing?
Variable cost refers to the TOTAL variable cost of all units, whereas marginal cost is the variable cost of the last unit only. Variable cost is the sum of all the individual marginal costs. The derivative of the Variable Cost is the Marginal Cost. The integral of the Marginal cost is the Variable Cost.
What is happening to average variable costs when they equal marginal costs?
When average variable costs equal to the average marginal cost, the average variable cost will be at the minimum point. i.e. lowest cost
What are the four measures of cost?
marginal cost, total cost, variable, and fixed cost
When the marginal cost is less than the average variable cost the average variable cost will?
decrease. Think about it this way, if you have a room full of people and you get their average height(average variable cost), and now each person that walks into the room(marginal cost) is shorter than the average, the average will drop.
Is the area under the marginal cost curve equal to the total variable cost?
yes
Is another term for variable costing?
It May Be Called as "Marginal Cost"
What is another term for variable costing?
It May Be Called as "Marginal Cost"
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.
What is the relationship between Average variable cost Average fixed cost and marginal cost?
we can subtract the AVC and we will get the MC
Relationship between marginal cost and the supply curve for a purely competitive firm?
Marginal cost curve above the average variable cost curve, is the same as the short run supply curve. In perfect competition, MC=Price. It follows that production will be at that point. Hence the supply curve is the same as that part of the MC curve which is above AVC, where the firm can cover its variable cost....this is better than shutting down.
What is diminishing marginal productivity explain with example?
the law diminishinf mean fixed cost and variable cost
Do fixed and variable costs affect short-run marginal cost?
Fixed costs do not affect short-run marginal cost because they are just that- fixed. They are not dependent on quantity when it changes and does not vary directly with the level of output. Variable costs, however, do affect short-run marginal costs.
