HAT Manifesto Part 1/3 - Rubric Cube - 241201 revision

 

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 5 Firm Behavior and the Organization of Industry

Chapter 13 of 36 The Costs of Production

Section 13 of 21

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Table 2 column 8 marginal cost shows the amount column 2 total cost rises

when the firm increases production by 1 unit of output.

Note since column 3 fixed cost does not change, column 2 total cost increases by the same amount as column 4 total variable cost.

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If Conrad increases production from 2 to 3 cups

· total cost rises from $3.80 to $4.50

· the marginal cost of the third cup of coffee is the difference, $0.70

The marginal cost amount appears halfway between two rows because it represents the change in total cost as quantity of output changes from one level to the next.

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The Greek letter delta Δ, is used to represent the “change” in a variable.

Marginal Cost = Change in Total Cost / Change in quantity, or MC = ΔTC / ΔQ

In Table 2, when moving from 3 to 4 cups of coffee produced .90 = .90 / 1

When moving up to one more unit produced, MC always = ΔTC

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Greek letter delta

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ギリシャ文字デルタ