Homework Answers
Marginal cost (MC) = Change in total cost (TC) / Change in output (Q)
Average cost (AC) = TC / Q
Assuming fixed costs remain same, Change in TC is equal to the change in total variable cost (TVC). So,
MC = Change in TVC / Change in Q
In contrast,
Since TC = TFC + TVC,
AC = (TFC/Q) + (TVC/Q)
AC = AFC + AVC
Therefore, while MC looks at the additional cost for producing 1 additional unit of output, it excludes any changes in fixed cost. But AC takes into consideration the fixed cost, so a change in TFC will change AC but not MC. If fixed costs are relevant in the production structure, then considering MC instead of AC will understate the true average production cost.
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please help with this microeconomics question! on 15 Table 13-16 t red Average Variable Marginal Average...
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please help with this microeconomics question!
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