Answered: Stretch the MC, ATC and AVC curves in a…

Stretch the MC, ATC and AVC curves in a diagram. Explain the reason why MC and ATC curve is shaped the way it is shaped and also explain the relationship between the three curves

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter7: Production, Inputs, And Cost: Building Blocks For Supply Analysis

Section: Chapter Questions

Problem 3TY

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Question

Stretch the MC, ATC and AVC curves in a diagram. Explain the reason why MC and ATC curve is shaped the way it is shaped and also explain the relationship between the three curves

Definition Definition Measure of the cost of production per unit of output, including only variable costs such as wages, materials, and utilities. AVC is calculated by dividing total variable cost by the number of units produced. Understanding average variable cost is important for businesses to make decisions on pricing, production levels, and profitability.

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Use the following table to ccalculate TFC - keep your calculation for follow up questions: Total Output Total Cost TFC TVC AFC AVC ATC MC 0 $20 10 $40 20 $60 30 $90 40 $120 50 $180 60 $280 a. Total Output Total Cost TFC 0 $20 $20 10 $40 $20 20 $60 $20 30 $90 $20 40 $120 $20 50 $180 $20 60 $280 $200 b. Total Output Total Cost TFC 0 $20 $0 10 $40 $10 20 $60 $20 30 $90 $30 40 $120 $40 50 $180 $50 60 $280 $60 c. Total Output Total Cost TFC 0 $20 $0 10 $40 $20 20 $60 $20 30 $90 $20 40 $120 $20 50 $180 $20 60 $280 $20 d. Total…
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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 the ATC curves at their minimum points.
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