Answer to Question #125943 in Microeconomics for Vanessa Jiao

Question

What is the difference between marginal utility and marginal value? How do we calculate marginal value on a demand curve. for example, if the question was to "calculate the marginal value at a quantity of 4,000 (which matches up to a price of 0.3$)" how do we go about this question?

Answer 1

In economics, marginal cost is the change in total value that occurs when the quantity produced increases by one unit; that is, the cost of production is another unit of goods. Clearly, the marginal cost at each level of production includes the cost of any additional resources necessary to obtain the next block.

At each level of production and a time period of time is considered, marginal costs include all costs that vary depending on the level of production, while other costs that do not change depending on the production are fixed and therefore have no marginal costs. For example, the marginal cost of producing a car, as a rule, includes the cost of labor and parts necessary for an additional car, rather than the fixed costs of the plant that have already been produced.

In practice, margin analysis is divided into short and long-term cases, so that, in the long run, all costs (including fixed costs) become insignificant.

$$MV=\frac {4000}{0.3}=13333$$