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.
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 ________.
- lower amounts
- higher amounts
- the same amounts