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The relation between 'marginal cost (MC)' and 'average cost (AC)' of producing 'x' units of a product is

Solution

✅ Correct Option: 4

With total cost C(x)C(x), average cost is Cx\frac{C}{x} and marginal cost is C′C'.

Differentiating by the quotient rule: ddx(Cx)=xC′−Cx2=1x(C′−Cx)=1x(MC−AC)\frac{d}{dx}\left(\frac{C}{x}\right)=\frac{xC'-C}{x^2}=\frac{1}{x}\left(C'-\frac{C}{x}\right)=\frac{1}{x}(MC-AC).

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