The cost function C(q) gives the total cost of producing q units of a product. Just as we studied how revenue R(p) was affected by price changes given a demand function

q = f(p) through the elasticity of demand, there is a notion of elasticity of cost through which we can study the effect of increasing the quantity product on the cost function.

The elasticity cost at quantity q, Ec(q), is defined to be the ratio of the relative rate of change of cost with respect to q divided by the relative rate of change of quantity q with respect to q.

Q: Show that Ec is equal to the marginal cost divided by the average cost.

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