Marginal cost curve

After you have worked through this section of the learning unit, you should be able to:

  • present marginal cost with the aid of a diagram

Based on the data for Best Barber, we can now draw the marginal cost curve.

To summarise:

As total product increases, marginal cost first decreases, reaches a minimum and then increases.


Now do the following activity to see if you understand the marginal cost curve:

The following diagram represents the marginal cost for Blaker Maker:

1. Until what unit of production does the marginal cost decrease?

2. At what output level is the marginal cost the lowest?

3. As Blaker Maker increases production from 5 000 to 6 000 to 7 000, marginal cost increases. This increase in marginal cost is by ________.

  1. lower amounts
  2. higher amounts
  3. the same amounts

1. It is at 3 000 ornaments.

2. It is at 3 000 ornaments.

3. Marginal cost increases by higher amounts.