Q. 124.0( 1 Vote )

(a) Why is

Answer :

Marginal cost is an additional cost that is incurred to the total cost for the production of additional units.

MC=delta (TC)/Delta (Output)


It is U shaped because as the output increases the MC decreases initially and increases afterward.



(b) Average cost is derived by dividing the total cost by the number of units produced while Marginal cost is the cost of producing one additional unit of output.


AC=Total cost/total Units


MC= cost of one additional unit output


Therefore when average cost increases meaning the output units increases and marginal cost becomes less than the average cost.



Rate this question :

How useful is this solution?
We strive to provide quality solutions. Please rate us to serve you better.
Try our Mini CourseMaster Important Topics in 7 DaysLearn from IITians, NITians, Doctors & Academic Experts
Dedicated counsellor for each student
24X7 Doubt Resolution
Daily Report Card
Detailed Performance Evaluation
caricature
view all courses
RELATED QUESTIONS :

When does the shiEconomics - Board Papers

What happens to tEconomics - Board Papers

Define fixed costEconomics - Board Papers

What is the relatEconomics - Board Papers