relationship between marginal and average costs Consider the following scenario to understand the relationship between marginal and average values. Suppose Raphael is a professional basketball player, and his game log for free throws can be summarized in the following table. Fill in the columns with Raphael's free-throw percentage for each game and his overall free-throw average after each game. Game Game Result Total Game Free-Throw Percentage 1 4/5 4/5 80 2 2/5 6/10 3 1/4 7/14 4 1/2 8/16 5 4/4 12/20 Average Free-Throw Percentage 80 On the following graph, use the orange points (square symbol) to plot Raphael's free-throw percentage for each game individually, and use the green points (triangle symbol) to plot his overall average free-throw percentage after each game. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. FREE-THROW PERCENTAGE 100 90 80 70 60 50 40 30 20 10 0 0 1 2 3 5 GAME Game Free-Throw Percentage Average Free-Throw Percentage You can think of the result in any one game as being Raphael's marginal free-throw percentage. Based on your previous answer, you can deduce that when Raphael's marginal free-throw percentage is below the average, the average must be You can now apply this analysis to production costs. For a U-shaped average total cost curve, when the marginal cost curve is below the average total cost curve, the average total cost must be . Also, when the marginal cost curve is above the average total cost curve, the average total cost must be . Therefore, the marginal cost curve intersects the average total cost curve

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 22RQ: What are diminishing marginal returns as they relate to costs?
Question
relationship between marginal and average costs
Consider the following scenario to understand the relationship between marginal and average values. Suppose Raphael is a professional basketball
player, and his game log for free throws can be summarized in the following table.
Fill in the columns with Raphael's free-throw percentage for each game and his overall free-throw average after each game.
Game
Game Result Total Game Free-Throw Percentage
1
4/5
4/5
80
2
2/5
6/10
3
1/4
7/14
4
1/2
8/16
5
4/4
12/20
Average Free-Throw Percentage
80
On the following graph, use the orange points (square symbol) to plot Raphael's free-throw percentage for each game individually, and use the green
points (triangle symbol) to plot his overall average free-throw percentage after each game.
Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.
FREE-THROW PERCENTAGE
100
90
80
70
60
50
40
30
20
10
0
0
1
2
3
5
GAME
Game Free-Throw Percentage
Average Free-Throw Percentage
You can think of the result in any one game as being Raphael's marginal free-throw percentage. Based on your previous answer, you can deduce that
when Raphael's marginal free-throw percentage is below the average, the average must be
You can now apply this analysis to production costs. For a U-shaped average total cost curve, when the marginal cost curve is below the average total
cost curve, the average total cost must be
. Also, when the marginal cost curve is above the average total cost curve, the average total
cost must be
. Therefore, the marginal cost curve intersects the average total cost curve
Transcribed Image Text:relationship between marginal and average costs Consider the following scenario to understand the relationship between marginal and average values. Suppose Raphael is a professional basketball player, and his game log for free throws can be summarized in the following table. Fill in the columns with Raphael's free-throw percentage for each game and his overall free-throw average after each game. Game Game Result Total Game Free-Throw Percentage 1 4/5 4/5 80 2 2/5 6/10 3 1/4 7/14 4 1/2 8/16 5 4/4 12/20 Average Free-Throw Percentage 80 On the following graph, use the orange points (square symbol) to plot Raphael's free-throw percentage for each game individually, and use the green points (triangle symbol) to plot his overall average free-throw percentage after each game. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. FREE-THROW PERCENTAGE 100 90 80 70 60 50 40 30 20 10 0 0 1 2 3 5 GAME Game Free-Throw Percentage Average Free-Throw Percentage You can think of the result in any one game as being Raphael's marginal free-throw percentage. Based on your previous answer, you can deduce that when Raphael's marginal free-throw percentage is below the average, the average must be You can now apply this analysis to production costs. For a U-shaped average total cost curve, when the marginal cost curve is below the average total cost curve, the average total cost must be . Also, when the marginal cost curve is above the average total cost curve, the average total cost must be . Therefore, the marginal cost curve intersects the average total cost curve
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