Notes on Calculating Marginal Cost (MC) Formula for calculating marginal cost (MC) MC ATC/AQ. TC is...

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Notes on Calculating Marginal Cost (MC) Formula for calculating marginal cost (MC) MC ATC/AQ. TC is total cost, Q is quantity, and the delta symbol & means change. • To plug numbers into MC, we need to write MC a slightly different way. • MC=TC₂-TC₁/Q1-Q₁. This the form that MC needs to be in to put numbers in it. ● Follow the same approach for (MC-ATVC-AQ) that appears in the 8 column in the second Cost Table in your readings. . Here is a sample problem for the MC to produce two units of output in the first Cost Table (8 column) Let's look at the first two quantities 1 and 2. Use columns 4 and 1 for your numbers. MC-41-35/2-1 MC 6/1 Brief answers. MC=6 I • Just follow the instructions at the top of each column. They will tell you how to calculate the answer. Thus, from the first Cost Table, the MC to produce two units of output is 6. That is the answer that we have above and is the same answer that appears in the second row of column 8. The calculation above is how the answer was derived. Brief Quiz Briefly answer all questions. Show all work if required. 1. For both of the cost tables in your readings (SR Cost 2 and Cost Tab 1), take a look at the column 8 (marginal cost MC column). In your tables for the 8th column, there are two different formulas for calculating MC. Why will both of those calculations give the same answer? 2. Re-do the MC sample calculation, from the first Cost Table above, using the MC A TVC AQ formula. Show all work. Are your answers the same? Now take another look at the question in 1. What do you think? Notes on Calculating Marginal Cost (MC) Formula for calculating marginal cost (MC) MC ATC/AQ. TC is total cost, Q is quantity, and the delta symbol & means change. • To plug numbers into MC, we need to write MC a slightly different way. • MC=TC₂-TC₁/Q1-Q₁. This the form that MC needs to be in to put numbers in it. ● Follow the same approach for (MC-ATVC-AQ) that appears in the 8 column in the second Cost Table in your readings. . Here is a sample problem for the MC to produce two units of output in the first Cost Table (8 column) Let's look at the first two quantities 1 and 2. Use columns 4 and 1 for your numbers. MC-41-35/2-1 MC 6/1 Brief answers. MC=6 I • Just follow the instructions at the top of each column. They will tell you how to calculate the answer. Thus, from the first Cost Table, the MC to produce two units of output is 6. That is the answer that we have above and is the same answer that appears in the second row of column 8. The calculation above is how the answer was derived. Brief Quiz Briefly answer all questions. Show all work if required. 1. For both of the cost tables in your readings (SR Cost 2 and Cost Tab 1), take a look at the column 8 (marginal cost MC column). In your tables for the 8th column, there are two different formulas for calculating MC. Why will both of those calculations give the same answer? 2. Re-do the MC sample calculation, from the first Cost Table above, using the MC A TVC AQ formula. Show all work. Are your answers the same? Now take another look at the question in 1. What do you think?

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