1. The total cost of producing a quantity q is C(q). The average cost a(q) is given in figure below. The following rule is used by economists to determine the marginal cost C'(q0), for any qo: Construct the tangent line ti to a(q) at qo. Let t, be the line with the same vertical intercept as t, but with twice the slope of t, . Then C'(q0), is the vertical distance shown in figure below. Explain why this rule works. $/unit a(q) t2 t1 C'(qo)
1. The total cost of producing a quantity q is C(q). The average cost a(q) is given in figure below. The following rule is used by economists to determine the marginal cost C'(q0), for any qo: Construct the tangent line ti to a(q) at qo. Let t, be the line with the same vertical intercept as t, but with twice the slope of t, . Then C'(q0), is the vertical distance shown in figure below. Explain why this rule works. $/unit a(q) t2 t1 C'(qo)
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: The Cost Of Production
Section: Chapter Questions
Problem 6PA
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