State the relationship between Total Cost and Marginal Cost. With the help of a diagram and explain
Dear student
When TC curve rises at decreasing rate, MC curve is decreasing. When TC curve rises at an increasing rate, MC curve rises. When TC curve stops rising at decreasing rate i.e. at point ‘N’ (after which it starts rising at an increasing point), MC curve reaches its minimum point (x). While TC consists of both variable as well as of fixed costs (i.e. TVC and TFC), MC consists of only variable costs. TC curve is an inverse S-shaped curve, whereas, MC curve is inverted U-shaped curve. MC is derived from TC as: i.e. MC is the slope of TC curve.
Regards
When TC curve rises at decreasing rate, MC curve is decreasing. When TC curve rises at an increasing rate, MC curve rises. When TC curve stops rising at decreasing rate i.e. at point ‘N’ (after which it starts rising at an increasing point), MC curve reaches its minimum point (x). While TC consists of both variable as well as of fixed costs (i.e. TVC and TFC), MC consists of only variable costs. TC curve is an inverse S-shaped curve, whereas, MC curve is inverted U-shaped curve. MC is derived from TC as: i.e. MC is the slope of TC curve.
Regards