Chapter 11, Problem 5P

To determine

To Discuss:

• The effect of a change in variable cost
• The effect of positive productivity growth on marginal product curve and total product curves
• The effect of positive productivity growth on marginal cost curve and average total cost curves
• The increase in fixed cost

Concept Introduction:

• Total Cost − It is the sum of fixed and variable costs and it represents the total cost in producing the given level of output

• Average Total Cost − It is the total cost incurred in producing every unit of a product. It is determined by dividing total costs by the quantity of output.

• Variable Cost − This is the cost which varies with the change in the level of production.

• Average Variable Cost − It is the per unit variable cost for every unit of output.