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How is the marginal cost (MC) calculated in economics?

Alden Kling ∙

Lvl 10

∙ 1mo ago

Updated: 2/13/2025

In economics, the marginal cost (MC) is calculated by finding the change in total cost when producing one additional unit of a good or service. This is done by dividing the change in total cost by the change in quantity produced.

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Q: How is the marginal cost (MC) calculated in economics?

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Marginal cost is equal to?

MC = f'(x) = df/dx Marginal cost is equivalent to the derivative of the cost function.

What are the benefits of Marginal cost?

At first, marginal cost decreases due to specialization of workers. Then, MC begins to increase steadily. The only benefits of MC are in the period of specialization.

Why is marginal cost curve horizontal?

because mc=mb

At what point does the marginal cost (MC) curve intersect the average variable cost (AVC) curve?

The marginal cost (MC) curve intersects the average variable cost (AVC) curve at the minimum point of the AVC curve.

Why avc curve U shape?

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.

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Related Questions

What are 3 types of decisions that need to be made in economics?

What is the Marginal Benefit? What is the Marginal Cost? At what point does the MB & MC equal out? (All needs & wants satisfied)

Marginal cost is equal to?

MC = f'(x) = df/dx Marginal cost is equivalent to the derivative of the cost function.

What are the benefits of Marginal cost?

At first, marginal cost decreases due to specialization of workers. Then, MC begins to increase steadily. The only benefits of MC are in the period of specialization.

Why is marginal cost curve horizontal?

because mc=mb

At what point does the marginal cost (MC) curve intersect the average variable cost (AVC) curve?

The marginal cost (MC) curve intersects the average variable cost (AVC) curve at the minimum point of the AVC curve.

What is the relationship between marginal physical product MPP and marginal cost MC Provide an examples?

what is the relationship between marginal physical product and marginal cos

Why avc curve U shape?

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.

What is the relationship between Average variable cost Average fixed cost and marginal cost?

we can subtract the AVC and we will get the MC

Why does Net benefits increase when marginal benefits exceed marginal cost?

When Marginal benefit (MB) exceed Marginal cost (MC). The society values the additional unit of product more than the cost of producing it. In this case, Net benefit will increase as long as firms produces more until the point where MB = MC. (Because every additional output will add more to MB than to MC, Net benefit will rise)

If marginal revenue is greater than marginal cost the firm should?

If MR is greater than MC, the firm should increase their production. The ideal amount of production is determined by allowing the marginal cost to equal the marginal revenue.

Marginal cost equals marginal revenue?

If the firm operates in a perfectly competitive industry, profit is maximised at the ouput level where mc=mr.

Why average cost increase when marginal cost is increasing?

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.

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