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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.
The marginal product is the output produced by one more unit of a given input. Found at http://www.econmodel.com/classic/terms/marginal_product.htm
show with example that if the marginal product is always decreasing the average product is always above the marginal product?
Marginal cost comes from the costs of producing just one more of something.
Marginal Cost will keep increasing (have upward slope) because of the principle of diminishing marginal returns. The MC curve above the its intersection with AVC is the Supply Curve *because below minimum AVC, the firms stops production)
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.
true
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.
The marginal product is the output produced by one more unit of a given input. Found at http://www.econmodel.com/classic/terms/marginal_product.htm
show with example that if the marginal product is always decreasing the average product is always above the marginal product?
wet
Marginal cost is the extra cost incurred in producing one unit of a product.If the marginal cost is more than average cost that means that costs are increasing and if it is less it means costs are decreasing.This way we find out how are business is progressing.
Marginal cost comes from the costs of producing just one more of something.
Marginal Cost will keep increasing (have upward slope) because of the principle of diminishing marginal returns. The MC curve above the its intersection with AVC is the Supply Curve *because below minimum AVC, the firms stops production)
relation ship between average cost and marginal cost
They are increasing. Currently the only car that has not increased considerably is the Volvo S80. Peugeot is consistently increasing its car dimensions; a new 308 5 door is roughly the same size as a 1993 405 Estate.
Average Product = (Total Product) / (Labor) Marginal Product(2) = (Total Product)(2) - (Total Product)(1)