ECON 131 Lecture Notes - Lecture 3: Marginal Cost, Marginal Utility, Economic Equilibrium
Document Summary
It is the cost of producing a certain number of units of a good. Graphically, it can be expressed as the area underneath the supply curve up to the quantity produced. Figure 5. a. 1: the total cost to produce the first unit of the good is (area 1). The cost of producing an additional unit of the good is an additional (area 2) for a total cost of (area 1. +area 2) to produce a total of 2 units. If the producer wanted to producer a third unit, the additional cost of producing that extra unit would be (area 3). The total cost of producing 3 units of the good would be area 1 + area 2 + area 3 or + + = . Note: the amount that it costs to produce one more unit of a good is known as marginal cost (each individual area).
