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Total cost is variable cost and fixed cost combined.

TC=VC+FC
Now divide total cost by quantity of output to get average total cost.
ATC=TC/Q
Average total cost can be very handy for firms to compare efficiency at different output or when adjusting different factors of production.

 

Marginal cost is a concept that's a bit harder for people grasp. The "margin" is the end or the last. The marginal unit is the last unit. Think of marginal cost as the cost of the last unit, or what it costs to produce one more unit. It's hard to find exactly what the cost of the last unit is, but it's not hard to find the average cost of a group of a few more units. To find this, simply take the change in costs from a previous level divided by the change

2 Comments

Marginal cost and the average total cost is the very important topic about the Economics.

your topic is very nice and more information post.

i likes Economics because i am student of Economics.

Thank for sharing good idea.

keep it up.

15 months ago