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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

Define total cost, average total cost, and marginal cost. How are they related?

To determine
A relationship between average total cost, total cost and marginal cost.

Explanation

Average total cost refers to the cost of a typical unit of output, which is equal to the total cost divided by the quantity. Total cost refers to the cost of all inputs needed to produce with the given unit of output. Marginal cost refers the cost of producing an additional unit of output, which is equal to the change in total cost divided by the change in quantity.

Figure 1 show the marginal cost curve and average total cost.

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