1. *Understanding costs: Fill in the gaps in the following table, and then draw on a diagram the marginal cost, average variable and average total cost curves: Total Total Total Marginal Output Fixed Variable Cost Cost Average Fixed Cost Cost Cost Average Variable Cost Average Total Cost 0 100 1 125 2 145 3 157 4 177 5 202 6 236 7 270 8 326 9 398 10 490

1. *Understanding costs: Fill in the gaps in the following table, and then draw on a diagram the marginal cost, average variable and average total cost curves: Total Total Total Marginal Output Fixed Variable Cost Cost Average Fixed Cost Cost Cost Average Variable Cost Average Total Cost 0 100 1 125 2 145 3 157 4 177 5 202 6 236 7 270 8 326 9 398 10 490

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 32CTQ: How does fixed cost affect marginal cost? Why is this relationship important?

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Similar questions

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What shape of a long-run average cost curve illustrates economies of scale, constant returns to scale, and diseconomies of scale?
A small company that shovels sidewalks and driveways has 100 homes signed up for its services this winter. It can use various combinations of capital and labor: intensive labor with hand shovels, less labor with snow blowers, and still less labor with a pickup truck that has a snowplow on front. To summarize, the method Choices are: Method 1: 50 units of labor, 10 units of capital Method 2: 20 units of labor, 40 units of capital Method 3: 10 units of labor, 70 units of capital If hiring labor for the winter costs $100/unit and a unit of capital costs 400, what is the best production method? What method should the company use if the cost of labor rises to $20/unit?