Marginal+Cost+and+Marginal+Product+are+Mirror+Images

=**Marginal Product and Marginal Costs are Mirror Images:** =

Marginal product is the difference in total product divided by the change in input. Marginal costs are the change in the difference in total costs divided by the change in output (sometimes referred to as change in quantity (Q)). Diminishing Marginal Returns (DMR) refers to the concept that at some point each additional input (workers) will cause the marginal product to decrease. Because of DMR the marginal product will rise and then fall at a certain point (x), and the marginal costs will decrease to point (x) and then rise there after. An example to expain this economic idea is explicitly shown in the following:

Bob: costs the company $10 to employ in a shoe factory, if he were to produce two pairs of shoes, the company would be paying $5 per pair at the cost of how much Bob costs versus how many units he produces. (MP= 2, MC=5)

Sue: costs the company $10 to employ at the same shoe factory, if she were to produce 5 pairs of shoes, the company would be paying $2 per pair at the cost of how much Sue costs versus how many units she produces. (MP= 5, MC=2)

Therefore, it would be more efficient to continue to employ Sue because she is able to produce more at a less cost. This shows how marginal costs is the mirror image of marginal product: as the product increases, the costs decreases.

media type="youtube" key="3FmQ-LFkATQ" height="344" width="425" This video shows a guy playing around with a mirror in order to make what he does on one side be the exact opposite in the mirror. This is like the relationship between Marginal Costs and Marginal Products because MC and MP are mirror images of each other....

Question to Quiz your knowledge (answers below):

1. If there is a very large Marginal Cost, then the Marginal Product is going to be: a) very large b) very small

2. If James costs a shoe company $20 to employ, and he is able to produce 5 shoes. What is the MP and MC of James to the company?

Sweet Links to Learn MORE! [|Wiki: Marginal Costs] [|Wiki: Marginal Products] [|A Study Site for MC and MP] [|The Differences Between Marginals and Averages]

Answers: 1. b 2. MP=5, MC=4

[|The difference between Marginals and Averages]

[|Wiki: Marginal Products]