Answers.com > Wiki Answers > Categories > Science > Social Sciences > Economics > What importance are average cost and marginal cost in economic analysis?

What importance are average cost and marginal cost in economic analysis?

Answer:

Average cost: determines the accounting profit maximisation and minimal point where the firm can remain profitable.
Marginal cost: determines economic profit maximisation and minimal 'shut-down' point where the firm should still operate, even if at an accounting loss.

Note: Average cost (AC) and marginal cost (MC) are related. The rate of change of AC is always positive when MC is positive.

First answer by M200220232. Last edit by M200220232. Contributor trust: 47 [recommend contributor ]. Question popularity: 1 [recommend question].

[report abuse]

Can you answer these Economics questions?

	What are examples of industries that help the economic growth of Pennsylvania?	Answer it!
	How many member are there in the house of reps?	Answer it!
	What is the smallest component of the GDP?	Answer it!
	What is an economic system in which the government plans and determines the production of goods and services?	Answer it!
	What price will maximize the profit of a price searcher?	Answer it!

Relevant answers:

When the marginal cost is less than the average variable cost the average variable cost will?
decrease. Think about it this way, if you have a room full of people and you get their average height(average variable cost), and now each person that walks into the room(marginal cost) is shorter...
What is the relationship between marginal cost average total cost and average variable cost?
In the short run (which is what this question is about), as output increases, the average total cost decreases where the marginal cost is below it. First you have to realise that increasing and...
What happen if marginal cost is less than Average cost?
Average cost declines and output increases.
Why average cost increase when marginal cost is increasing?
Marginal cost = derivative of (Total cost/Quantity) Where Total cost = fixed cost + variable costMarginal cost = derivative (Variable cost/Quantity) (by definition, fixed costs do not vary with...
What happens when marginal cost exceeds average total cost?
MC is the cost of producing one extra good, so if the cost of producing that one extra good is above the average, then the ATC increases.

Shopping for Economics deals?

Find Coupons and Promo Codes on Coupons by Answers.com

FIND MORE COUPONS AND PROMO CODES

What importance are average cost and marginal cost in economic analysis?

Can you answer these Economics questions?

Relevant answers:

Related ads:

Shopping for Economics deals?

Find Coupons and Promo Codes on Coupons by Answers.com

Home

Answer these

Featured guides

Site

Company

Community

Updates

International sites