
SIXTH RULE OF IGNORANCE: The sixth of seven basic rules of the economy. It is a fact of life that obtaining information is a costly activity, it requires resources that have alternative uses. As such, no one knows everything and everyone is ignorant about something. I might know a lot about economics, but you can recite every line of every episode of "Gilligan's Island", and that weirdlooking guy you bumped into at the store has a detailed account of everything you've done for the past five years.
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TOTAL COST AND MARGINAL COST: A mathematical connection between marginal cost and total cost stating that marginal cost IS the slope of the total cost curve. This relation between total cost and marginal cost is also seen with total variable cost. The slope of the total variable cost curve is marginal cost, as well. The relation between total cost and marginal cost is but another in the long line of applications of the totalmarginal relation. Total Cost and Marginal Cost 

  The slope of the total cost curve (and total variable cost curve) is marginal cost. As such, if the total cost curve has a positive slope (that is, is upward sloping), then marginal cost is positive. Moreover, if the total cost curve has a positive and increasingly steeper slope, then the marginal cost is positive and rising. If the total cost curve has a positive and increasingly flatter slope, then the marginal cost is positive but falling. This particular totalmarginal relation applies to both total cost and total variable cost. Because not only is marginal cost the slope of the total cost curve, it is also the slope of the total variable cost curve. The reason is that any changes in total cost resulting from changing output is matched by changes in total variable cost. This occurs because total fixed cost is FIXED. This twopaneled graph for the production of Wacky Willy Stuffed Amigos (those cute and cuddly armadillos and rattlesnakes) visually illustrates the connection between total cost and marginal cost. For the first few quantities of output (Stuffed Amigos), total cost in the top panel is positive AND the slope of the total cost curve decreasesit becomes flatter. This corresponds with a positive and decreasing marginal cost in the bottom panel up to 4 Stuffed Amigos. For the next several quantities of Stuffed Amigos output, the slope of the total cost curve becomes increasingly steeper. This corresponds to an increasing marginal cost in the bottom panel. The prime conclusion is the key role played by the law of diminishing marginal returns in the slope of both the marginal cost curve and the total cost curve.  The Ushape of the marginal cost curve is a direct reflection of first increasing marginal returns, as marginal cost falls to a minimum, then decreasing marginal returns and the onset of the law of diminishing marginal returns as marginal cost rises.
 However, because the marginal cost curve is a plot of the slope of the total cost curve, then the shape of the total cost curve also reflects the law of diminishing marginal returns. The flattening slope of the total cost curve for small quantities of output is due to increasing marginal returns. Then the onset of the law of diminishing marginal returns causes the total cost curve to become increasingly steeper.
While this diagram relates marginal cost and total cost, the same story applies to the relation between marginal cost and total variable cost. Marginal cost is also the slope of the total variable cost curve. As such, the shape of the total variable cost curve is also a reflection of increasing, then decreasing marginal returns.
Recommended Citation:TOTAL COST AND MARGINAL COST, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 20002018. [Accessed: June 23, 2018]. Check Out These Related Terms...        Or For A Little Background...          And For Further Study...               
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Today, you are likely to spend a great deal of time wandering around the downtown area looking to buy either a 50 foot extension cord or a combination CD player, clock radio, and telephone (with answering machine). Be on the lookout for high interest rates. Your Complete Scope
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Potato chips were invented in 1853 by a irritated chef repeatedly seeking to appease the hard to please Cornelius Vanderbilt who demanded french fried potatoes that were thinner and crisper than normal.


"The majority of men meet with failure because of their lack of persistence in creating new plans to take the place of those that fail. "  Napoleon Hill, author


TFC Total Fix Cost


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