3.4 Marginal Functions in Economics

3.4 Marginal Functions in Economics

Objectives: 1. Define "marginal" in the use of economics. 2. Find the average cost function.

The actual cost incurred in producing an additional unit of a certain commodity given that a plant is already at a certain level of operation is called the marginal cost. The marginal cost is approximated by the rate of change of the total cost function evaluated at the appropriate point. For this reason, economists have defined the marginal cost function to be the derivative of the corresponding total cost function.

In other words, marginal is synonymous with the "derivative of."

If the total cost (in dollars) incurred in manufacturing x ElectroStat speaker systems in the first year of production will be

C(x) 150x 200, 000

The quantity demanded each month is related to the unit price by the equation:

p

40 0.02x2

3

0 x 20

Find the revenue function R and find the marginal revenue function R?

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