Topic 6: “Be able to explain and calculate average. and marginal cost to make production decisions.”. Reference: Gregory Mankiw’s Principles of Microeconomics, 2nd edition, Chapter 13. Long-Run versus Short-Run. In order to understand average cost and marginal cost, it is first necessary to understand.
http://www.csun.edu/sites/default/files/micro6_0.pdf
In this section we will look at how you calculate marginal cost, total cost, fixed cost, total variable cost, average total cost, average fixed cost, and average variable cost when you have a linear relationship between total cost and quantity. These are equations such as TC = 400Q + 20, or TC = 50 + 6Q.
https://www.thoughtco.com/understand-and-calculate-cost-measures-1146327
In a table which gives you total cost and quantity produced. A linear equation relating total cost (TC) and quantity produced (Q). This would be an equation like TC = 400Q + 20, or TC = 50 + 6Q. A non-linear equation relating total cost (TC) and quantity produced (Q). This would be an equation like TC = 34Q3 – 24Q + 9 or TC = Q – log(Q).
https://www.thoughtco.com/understand-and-calculate-cost-measures-1146327
Take a look at the table below to see how marginal cost was computed. For example, the marginal cost when the quantity is 56 is $2.82. This was computed by taking TC at 55.90Q ($350) minus TC at 38.16Q ($300) divided by 55.9Q minus 38.16Q (17.74Q). Take a look at the graph. You'll notice that the ATC curve is a U-shape.
http://economics.fundamentalfinance.com/micro_atc_mc.php
Given the cost function: (a) Find the average cost and marginal cost functions. (b) Use graphs of the functions in part (a) to estimate the production level that minimizes the average cost. (c) Use calculus to find the minimum average cost. (d) Find the minimum value of the marginal cost.
http://faculty.wlc.edu/buelow/CALC/nt4-7.html
In the computer monitor example, let's set our fixed costs of the monthly lease payment for the equipment and building at $50,000. We can set our variable costs at $100. For purposes of comparing how average total cost can change based on production, let's set output (Q) at 4,000 in July and 6,000 in August. In July, our total cost is $50,000 + $100(4,000) = $450,000. Once we have total cost, we can divide that by our quantity produced to get average total cost. For July, $450,000 / 4,000 = $112.50. In July, each monitor produced cost $112.50. Using the same formula for August but increasing production, results in an average total cost of $108.33.
http://study.com/academy/lesson/average-total-cost-definition-formula-quiz.html
Lesson Summary. Marginal cost is the increase or decrease in total production cost if output is increased by one more unit. The formula to obtain the marginal cost is change in costs/change in quantity. If the price you charge per unit is greater than the marginal cost of producing one more unit, then you should produce that unit.
http://study.com/academy/lesson/marginal-cost-definition-equation-formula.html
To find the marginal cost, we use the formula: C'(x) We plot the graph of the average cost (red), and the graph of the marginal cost (green). By observation, it appears that the value of x (number of items produced) where the two graphs intersect is about x = 140.
http://faculty.wlc.edu/buelow/CALC/nt4-7.html
The next logical step is to calculate the marginal benefits (marginal utility), and marginal costs. In order to do this we should begin at 0% clean air. When we move to 10% clean air, we see that benefits go up by 50, and costs go up by 45. This means that our marginal benefit from 10% clean air is 50, and our marginal cost of 10% clean air is 45. When we move from 10% to 20% we see total benefit change from 50 to 130. This means that marginal benefit from another 10% increase in clean air (from 10% to 20%) is 80 (130-50).
http://www.freeeconhelp.com/2011/10/how-to-calculate-marginal-costs-and.html
Since the marginal cost is less than the price you charge per item, you can expand production. Marginal cost is the increase or decrease in total production cost if output is increased by one more unit. The formula to obtain the marginal cost is change in costs/change in quantity.
http://study.com/academy/lesson/marginal-cost-definition-equation-formula.html
determining marginal cost from total cost equation
The formula to obtain the marginal cost from total cost is change in costs divided by change in quantity.  