Jim Whitney Economics 102

Deriving marginal and average values from total value curves

Example: Total production costs in the short run (small number of units)
    TC formula: TC = 146 +147Q - 24Q2 + 2Q3
whitespace.gif (816 bytes)
 
Quantity Total  cost
(TC)		 Marginal  cost
(MC)		 Average total
cost (ATC)
0 196 --- ---
1 321 125 321
2 410    
3 475    
4 528    
5 581    
6 646    
7 735    
8 860    
9 1033    
10 1266    
whitespace.gif (816 bytes)
Step 1: Fill in the rest of the table.
Step 2: Plot the MC values in the lower righthand diagram and trace out the MC curve.
Step 3: Plot the ATC values in the lower righthand diagram and trace out the ATC curve.
Step 4: Complete the following table about the relationship between total value (TV) and marginal value (MV):
  MV positive, negative, or 0? MV rising, falling, constant?
TV rises at a diminishing rate    
TV rises at an increasing rate    
TV rises at a constant rate    
TV falls