Hi Guys! In this video I explain why our (Short run) Marginal Cost curve is often represented as looking like a rounded tick shape. Please like and Subscribe - and comment below. I hope the video helps!
The explanations were so precise ! This has to be the best marginal cost video on the internet for me .( Ive checked other ones). U deserve way more views too
That's so nice C Maks! I feel so appreciated because of your comment and I am inspired to do more videos. Thanks for the encouragement, I hope that ace your exams :)
The quality and brevity of your content is superb. I really liked how you linked MPL to MC. I never thought of that, it is a new insight for me. It even makes more sense now when looking at Macroeconomics topics where markups drives a wedge between factor prices and marginal cost and how it impacts labor share in an economy. Thank you, please keep making videos.
Oh that's an idea! I haven't looked at those models in ages- I remember especially the Heckscher-Ohlin model was fun. I have a little newborn atm so am time poor but will put it on my list of things to do.
Hi. I undestand MC's shape in short run, cause capital (cost) is fixed, but in long run all costs are variable costs, so why Long-Run MC curve has same shape as Short-Run MC ?
Hi Nurbek. How's this... Usually we discuss LRAC curve as U shaped, so it goes from decreasing to increasing - like a bowl shape - the lower envelope of the SRAC curves. Well... if you believe this, then you must also accept that for the area that LRAC is decreasing, the LRMC is beneath the LRAC, and where the LRAC is increasing the LRMC must be above the LRAC. LRMC curve intersects LRAC curve at the minimum of LRAC. I go through this logic here, as it relates to the SR curves, but it's the same logic: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE--fhd938oKIo.html. So our shape of our LRMC curve is then linked to the reasons why our LRAC decreases and then increases! We usually talk about as due to economies of scale or diseconomies of scale. Actually I think wikipedia is pretty good on this on why we get economies of scale / diseconomies of scale, though i didn't read it very carefully: en.wikipedia.org/wiki/Diseconomies_of_scale; en.wikipedia.org/wiki/Economies_of_scale. One thing to note is that the LRMC is flatter than the SRMC curve (so not as steeper increase in MC as we increase quantity), because we have more flexibility in our choice of inputs (as you say, our inputs are variable) so we can choose the most cost effective way of producing the marginal unit. I have taught courses where this is not clear in the text or diagrams, and I think it's because it's treated as a finer point, and so text books skip over it, but it's something to note... the LRMC and SRMC don't have exactly the same shape, just similar. I hope that helps?!