1. The total cost of producing a quantity q is C(q). The average cost a(q) is given in figurebelow. The following rule is used by economists to determine the marginal cost C'(q0), forany qo:Construct the tangent line ti to a(q) at qo.Let t, be the line with the same vertical intercept as t, but with twice the slope of t, .Then C'(q0), is the vertical distance shown in figure below. Explain why this rule works.$/unita(q)t2t1C'(qo)

C’ (q 0) is the marginal cost for any q 0. The line t 2 has slope twice than that of line t 1.

Answered: 1. The total cost of producing a…

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter7: Production And Cost In The Firm

Section: Chapter Questions

Problem 18PAE

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