Question

Please write a 75 word response to the post below

Recently, my wife and I had a new home built. In the process of building, many times we were faces with the dilemma of how to purchase what you want and remain in budget. Oh, how I wish I has taken this class prior to making the decision to build. Prior to this class, Marginal cost, Average total cost, and Average Variable Cost were unknown terms to me. Now, I realize that during the house building process every decision made relative to cost and spending required Marginal cost, Average total cost, and Average Variable Cost considerations. Thinking back, our primary focus was on the average total cost but I now believe that average variable cost should have been our focus. For example, we chose to upgrade and add a few additional light fixtures, and in doing so, we only considered average total cost. IF we had considered marginal cost, quite possibly, we could have saved more money because we could have more closely considered each individual addition.

Answer 1

True that, the marginal cost of the production or producing something take the cost of every single goods used in the production more minutely, the average variable cost will not take the fixed costs into account and average total cost will take a birds eye view of the market, If we are taking the marginal cost into account we are accounting for all the costs in the market. It will increase as we add more and more of the new goods in production, if the price of those goods are costly and of those goods are of low cost it will decrease, decreasing the whole variable and total cost.