Info

123456789 10 Output

FIGURE 7.2 The total cost curve.

marginal cost (MC) and average cost (AC) curves of production are typically U-shaped—initially, as output increases both MC and AC decline, but after a certain level of output they both turn upward, again the consequence of the law of diminishing return. This can be seen in Figure 7.3 (see also Figure 7.1). And since the MC and AC curves are derived from the total cost curve, the U-shaped nature of these curves puts some restrictions on the parameters of the total cost curve (7.10.4). As a matter of fact, it can be shown that the parameters of (7.10.4) must satisfy the following restrictions if one is to observe the typical U-shaped short-run marginal and average cost curves:19

Output

Was this article helpful?

0 0
Rules Of The Rich And Wealthy

Rules Of The Rich And Wealthy

Learning About The Rules Of The Rich And Wealthy Can Have Amazing Benefits For Your Life And Success. Discover the hidden rules and beat the rich at their own game. The general population has a love / hate kinship with riches. They resent those who have it, but spend their total lives attempting to get it for themselves. The reason an immense majority of individuals never accumulate a substantial savings is because they don't comprehend the nature of money or how it works.

Get My Free Ebook


Post a comment