Average Cost, Average Revenue, and Average Profit
These are often useful to calculate the average cost per unit, the average revenue per unit, and the average profit per unit, denoted by AC(x), AR(x), and AP(x).
Marginal Averages
The marginal average cost reveals how much the average cost of producing an item is changing at any given moment.
For example, if MAC(45 sneakers) = -$3, then this means when the 45th pair of sneakers have been produced, the average cost is decreasing by $3 per pair of sneakers produced.
The marginal average revenue reveals how much the average revenue from producing an item is changing at any given moment.
For example, if MAR(45 sneakers) = $2, then this means when the 45th pair of sneakers have been produced, the average revenue is increasing by $2 per pair of sneakers produced.
The marginal average profit reveals how much the average profit from producing an item is changing at any given moment.
For example, if MAP(45 sneakers) = $5, then this means when the 45th pair of sneakers have been produced, the average profit is increasing by $5 per pair of sneakers produced.
A.1: It costs a shirt company $2 to produce each shirt, and fixed costs are $10,00. Find the marginal average cost at x = 100 and interpret your answer.
A.2: Mr McConnell drives 15 miles to his office every day. If he drives at a constant speed v miles per hour, his travel time is
Find T’(45) and interpret this number.
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