Average fixed cost Average variable cost Average total cost To Draw: Average fixed cost curve Average variable cost curve Average total cost curve To Discuss: Law of diminishing marginal productivity Concept Introduction: Fixed Cost − A cost which does not change with an increase or decrease in units produced and it remains constant. Fixed costs need to be paid even when there is no production. Variable Cost − This is a cost which varies with the number of units produced Total Cost − It is the sum of total fixed and variable costs Law of Diminishing Marginal Productivity − It states that introducing more units of variable input with a given quantity of fixed inputs, the total output will increase at an increasing rate initially but then it will increase at a constant rate and eventually it will increase at a diminishing rate

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Chapter 11, Problem 4P

To determine

Average fixed cost

Average variable cost

Average total cost

To Draw:

Average fixed cost curve

Average variable cost curve

Average total cost curve

To Discuss:

Law of diminishing marginal productivity

Concept Introduction:

Fixed Cost − A cost which does not change with an increase or decrease in units produced and it remains constant. Fixed costs need to be paid even when there is no production.

Variable Cost − This is a cost which varies with the number of units produced

Total Cost − It is the sum of total fixed and variable costs

Law of Diminishing Marginal Productivity − It states that introducing more units of variable input with a given quantity of fixed inputs, the total output will increase at an increasing rate initially but then it will increase at a constant rate and eventually it will increase at a diminishing rate

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