Explain how the locations of each of the four curves, Ask an Expert

Economics

A firm has fixed costs of $60 and variable costs as indicated in the table below. Complete the table.

Total product	Total fixed cost	Total variable cost	Total cost	Average fixed cost	Average variable cost	Average total cost	Marginal cost

0	$____	$0	$____
1	_____	45	_____	$____	$____	$____	$____
2	_____	85	_____	_____	_____	_____	_____
3	_____	120	_____	_____	_____	_____	_____
4	_____	150	_____	_____	_____	_____	_____
5	_____	185	_____	_____	_____	_____	_____
6	_____	225	_____	_____	_____	_____	_____
7	_____	270	_____	_____	_____	_____	_____
8	_____	325	_____	_____	_____	_____	_____
9	_____	390	_____	_____	_____	_____	_____
10	_____	465	_____	_____	_____	_____	_____

a. Graph total fixed cost, total variable cost, and total cost. Explain how the law of diminishing returns influences the shapes of the total variable-cost and total? Cost curves.

b. Graph AFC, AVC, ATC, and MC. Explain the derivation and shape of each of these four curves and their relationships to one another. Specifically, explain in nontechnical terms why the MC curve intersects both the AVC and ATC curves at their minimum points.

c. Explain how the locations of each of the four curves graphed in question 7b would be altered if (1) total fixed cost had been $100 rather than $60, and (2) total variable cost had been $10 less at each level of output.

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9165757

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