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Marginal Functions in Economics - Alamo Colleges District

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Marginal Functions in Economics One of the applications of derivatives in a real world situation is in the area of Marginal analysis. Marginal analysis uses the derivative (or rate of change) to determine the rate at which a particular quantity is increasing or decreasing. In this section, the Marginal Functions that we will cover are those for the cost, average cost, revenue, and profit Functions . The last topic that will be covered is the elasticity of demand. No matter which function we are dealing with, the word Marginal indicates to us that we need to find the derivative of the function. For example, if we are asked to find the Marginal cost function then we need to find the derivative of the cost function. When the Marginal function is evaluated it will give the approximate change for the next unit. For example, if we evaluated a Marginal cost function when x = 100 then the value of C (100) would be the approximate cost of producing the next unit (or the 101st unit).

function then we need to find the derivative of the cost function. When the marginal function is evaluated it will give the approximate change for the next unit. For example, if we evaluated a marginal cost function when x = 100 then the value of C′(100) would be the approximate cost of producing the next unit (or the 101st unit).

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