We are concerned with the relationship between AP and MP
Where average product is rising, at a maximum, or falling is
determined by its derivative with respect to L:The right-hand side may be rewrittenClearly, when MP is greater than AP, the expression in Equation
15.5 is positive and thus AP is rising. When MP is less than
AP is falling. When they are equal, AP is neither rising nor falling.
16. The text defines incremental cost. Strictly, marginal cost is the rate
of change of total cost with respect to output, Q. In other words, it
is the derivative of total cost with respect to output,
- This point is easily seen if a little algebra is used:
d(dQL/L) = L⋅(dQ/Ld 2 L)−Q[15.4]
L^1 ⋅[ddLQ −QL]= L^1 ⋅(MP−AP)[15.5]
MC= ddTQCAVC= TVQC