2. Using Figure 2 below, showing Average Total Cost (ATC), explain the maximum number of units that will be produced by a price taker and a price searcher firm. What causes ATC to change as # Units Produced changes? Cost per Unit $60 $50 $30 Figure 2 - Average Total Costs 500 800 950 1100 # Units Produced Market Price (MR)
2. Using Figure 2 below, showing Average Total Cost (ATC), explain the maximum number of units that will be produced by a price taker and a price searcher firm. What causes ATC to change as # Units Produced changes? Cost per Unit $60 $50 $30 Figure 2 - Average Total Costs 500 800 950 1100 # Units Produced Market Price (MR)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Step 1
Average total costs:
Economic costs involve not just the accounting costs but also the opportunity cost of making one particular output.
The average total cost signifies the total cost incurred per unit of output produced. It consists of an average fixed cost that remains unchanged over any unit production and an average variable cost that changes with the production amount.
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