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How does total cost relate to total in the market total cost relate to the production output?

In: Economics [Edit categories]

Answer:

In a perfectly competitive market, all n firms are equal. Thus, the market total cost is the total cost (TC) of one firm multiplied by the amount of n firms in the market
Total Market Cost = n(TC)

Total cost relates to output because firms want to make a profit.

Profit = TR - TC where TR = total cost and TR = total revenue.

Firms produce at the quantity which MR (marginal revenue) = MC (marginal cost). At this quantity, multiply it by n number of firms in the market to achieve the total output in a market.

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Ethan

First answer by Ethan Alt. Last edit by Ethan Alt. Contributor trust: 0 [recommend contributor ]. Question popularity: 2 [recommend question].

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