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Marginal cost, and minimizing cost & average cost - Derivative Applications

Marginal cost, and minimizing cost & average cost

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Notes:
Marginal Cost (MC) is the additional cost that is gained when you increase the unit by one. It is also the derivative of the cost function. In other words,
MC=C(q)MC=C'(q)

Average Cost (AC) is the amount of cost generated per unit. In other words,
AC(q)=C(q)qAC(q)=\frac{C(q)}{q}
In this section, we would want to find the quantity qq, which minimizes cost and average cost. To minimize cost, we would want to solve for:

MC=0MC=0

To minimize average cost, we would want to solve for:

AC(q)=0AC'(q)=0
  • 1.
    Marginal Cost, and Maximizing Cost & Average Cost Overview:
  • 2.
    Finding & Minimizing the Cost
    Given the following information, find the marginal cost and the value of qq which minimizes the cost:
  • 3.
    Finding & Minimizing the Average Cost
    Given the following information, find the marginal average cost and the value of qq which minimizes the average cost:
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Marginal cost, and minimizing cost & average cost

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