Sum+of+Ch+8+Cost+Production - When marginal product is...

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Summary of Chapter 8 Cost of Production concepts 1. Total-Marginal relationship : Marginal product is the rate of change of total product. If you add the marginal products you will get the total product. When the marginal product is positive, total product is rising. When the marginal product is negative, total product is falling. Marginal cost is the rate of change of total cost. If you add the marginal cost of each unit of output you will get the total cost. When the marginal cost is falling, total cost is increasing at a decreasing rate. When the marginal cost is rising, total cost is increasing at an increasing rate. 2. Marginal-Average Product Relationship
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Unformatted text preview: : When marginal product is greater than average product, marginal product causes average product to rise. When marginal product is equal to average product, average product is at its maximum. When marginal product is less than average product, marginal product causes average product to fall. 3. Marginal-Average Cost Relationship: When marginal cost is less than average cost, marginal cost causes average cost to fall. When marginal cost is equal to average cost, average cost is at its minimum. When marginal cost is greater than average cost, marginal cost causes average cost to rise....
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