High AFC High ATC High MC High ATC MC ATC Minimum of ATC Diminishing marginal product sets in AFC 9MALL Quantity of Output At low levels of output, ATC is high because AFCI high-the fixed plant is underutiized. At high levels of output (dlose to capacity), the fixed plant is overutilized, leading to high MC and, consequently, high ATC. It is diminishing marginal product that causes the MC, and eventually the AVC and ATC, to rise. In U-Shaped Average Total Cost Curve above Section 11.4 exhibit 2, why does AFC continue to fall even while ATC rises at very high output? Cost per Unit (dollars)

High AFC High ATC High MC High ATC MC ATC Minimum of ATC Diminishing marginal product sets in AFC 9MALL Quantity of Output At low levels of output, ATC is high because AFCI high-the fixed plant is underutiized. At high levels of output (dlose to capacity), the fixed plant is overutilized, leading to high MC and, consequently, high ATC. It is diminishing marginal product that causes the MC, and eventually the AVC and ATC, to rise. In U-Shaped Average Total Cost Curve above Section 11.4 exhibit 2, why does AFC continue to fall even while ATC rises at very high output? Cost per Unit (dollars)

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 8SCQ: Automobile manufacturing is an industry subject to significant economies of scale. Suppose there are...

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