Marginal Change small incremental ad justments to a lan of action Examples education air plane company bread
Marginal Change • small incremental adjustments to a plan of action. • Examples – education – air plane company – bread…
Susans Production Function 2 Quantity tput 16 Producti function 140 120 100 80 60 0 20 DO 3 4 5 Number of Worker Hired
Susan' s Production Function 2 0 2 0 4 0 6 0 8 0 100 120 140 160 0 1 2 3 4 5 6 Quantity of Output Number of Worker Hired Production function
Susans Total- cost curve Total Cost 90 Total-cost Curve 80 60 50 40 30 20 10 90 120 140 150 Quantit of output
Susan' s Total- cost Curve 0 1 0 2 0 3 0 4 0 5 0 6 0 7 0 8 0 9 0 100 0 5 0 9 0 120 140 150 Quantity 200 of Output Total Cost Total-cost Curve
3.3.2 Various Measures of cost Fixed Costs costs that do not vary with the quantity of output produced Variable costs costs that do vary with the quantity of output produced
3.3.2 Various Measures of Cost • Fixed Costs – costs that do not vary with the quantity of output produced. • Variable Costs – costs that do vary with the quantity of output produced
Average and Marginal Cost average total cost total cost divided by the quantity of output average fixed cost(FC/Q) fixed costs divided by the quantity of output average variable cost(VC/Q) variable costs divided by the quantity of output marginal cost the increase in total cost that arises from an extra unit of roduction ATC= TC/Q, MC=4 TC/4 Q
Average and Marginal Cost • average total cost – total cost divided by the quantity of output. • average fixed cost (FC/Q) – fixed costs divided by the quantity of output. • average variable cost (VC/Q) – variable costs divided by the quantity of output. • marginal cost – the increase in total cost that arises from an extra unit of production. • ATC= TC/ Q, MC= ⊿ TC/ ⊿ Q