the amount a firm's costs change when an additional good or service is produced
MC = f'(x) = df/dx Marginal cost is equivalent to the derivative of the cost function.
At first, marginal cost decreases due to specialization of workers. Then, MC begins to increase steadily. The only benefits of MC are in the period of specialization.
because mc=mb
Overall because of diminishing marginal returns. The marginal cost curve, MC, decreases until diminishing marginal returns set in and and it begins to increase. When the MC is below the AVC, the AVC must fall. When the MC is above the AVC, the AVC must rise. In otherwords, if the marginal cost is decreasing the average cost must be decreasing as well and vice versa.
we can subtract the AVC and we will get the MC
MC = f'(x) = df/dx Marginal cost is equivalent to the derivative of the cost function.
At first, marginal cost decreases due to specialization of workers. Then, MC begins to increase steadily. The only benefits of MC are in the period of specialization.
because mc=mb
what is the relationship between marginal physical product and marginal cos
Overall because of diminishing marginal returns. The marginal cost curve, MC, decreases until diminishing marginal returns set in and and it begins to increase. When the MC is below the AVC, the AVC must fall. When the MC is above the AVC, the AVC must rise. In otherwords, if the marginal cost is decreasing the average cost must be decreasing as well and vice versa.
we can subtract the AVC and we will get the MC
When Marginal benefit (MB) exceed Marginal cost (MC). The society values the additional unit of product more than the cost of producing it. In this case, Net benefit will increase as long as firms produces more until the point where MB = MC. (Because every additional output will add more to MB than to MC, Net benefit will rise)
If MR is greater than MC, the firm should increase their production. The ideal amount of production is determined by allowing the marginal cost to equal the marginal revenue.
If the firm operates in a perfectly competitive industry, profit is maximised at the ouput level where mc=mr.
if mc=0, its a natural monopoly.
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.
NO, it depends on where the ATC (avg total cost) intercepts the MC (Marginal Cost)