International økonomi

marginal cost

29. november 2011 af sashii

why si the marginal cost 5 in this equation? TC = 200 + 5Q


Brugbart svar (1)

Svar #1
29. november 2011 af Walras

Take the derivative..


Svar #2
29. november 2011 af sashii

I don't get it? MC=change(Total cost)/change(Q)

SO that has to be: (200+5Q)/Q = 200+5?


Brugbart svar (1)

Svar #3
29. november 2011 af Walras

MC is the cost of producing one extra unit. It should be known that dTC/dQ is determining the change in TC when raising Q by one unit. Thus, dTC/dQ=MC(Q) by definition.

Please remember that the slope of a linear function (e.g. this linear demand function) is given by Δy/Δx (ΔTC/ΔQ) but that is exactly the same as the derivative of the function.

What you're detemining in #2 is ATC (average total cost), although you made a mistake. ATC=200/Q+5


Svar #4
29. november 2011 af sashii

Ohhh... so in this case: TC=200+5Q I CAN actually - without calculating - see that the b=5?


Brugbart svar (1)

Svar #5
29. november 2011 af Walras

Yes - in this case (what is b though?). If you have a slightly more complicated TC function, say, TC=2√(Q), then it might be more fun to find the derivative. But in the case with a linear curve it is always very easy to find MC.


Svar #6
29. november 2011 af sashii

lol yea I could c that. thnx a lot! (I just totally forgot abt derivativing) 


Brugbart svar (1)

Svar #7
29. november 2011 af Walras

...a rule of thumb when studying economics: never forget about mathematics!


Svar #8
29. november 2011 af sashii

pretty gud idea! :)


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