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Marginal cost
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== Relationship between marginal cost and average total cost == The marginal cost intersects with the average total cost and the average variable cost at their lowest point. Take the [Relationship between marginal cost and average total cost] graph as a representation. [[File:Avc atc mc.png|thumb|Relationship between marginal cost and average total cost]] Say the starting point of level of output produced is n. Marginal cost is the change of the total cost from an additional output [(n+1)th unit]. Therefore, (refer to "Average cost" labelled picture on the right side of the screen. [[File:Average cost, total cost and marginal cost.png|thumb|Average cost]] In this case, when the marginal cost of the (n+1)th unit is less than the average cost(n), the average cost (n+1) will get a smaller value than average cost(n). It goes the opposite way when the marginal cost of (n+1)th is higher than average cost(n). In this case, The average cost(n+1) will be higher than average cost(n). If the marginal cost is found lying under the average cost curve, it will bend the average cost curve downwards and if the marginal cost is above the average cost curve, it will bend the average cost curve upwards. You can see the table above where before the marginal cost curve and the average cost curve intersect, the average cost curve is downwards sloping, however after the intersection, the average cost curve is sloping upwards. The U-shape graph reflects the law of diminishing returns. A firm can only produce so much but after the production of (n+1)th output reaches a minimum cost, the output produced after will only increase the average total cost (Nwokoye, Ebele & Ilechukwu, Nneamaka, 2018).
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