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short-run marginal-cost curve

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Total output Costs TFC TVC AFC AVC ATC MC
0 $100 $100
1 $150 $100 $50 $100 $50 $150 $50
2 $225 $100 $125 $50 $63 $113 $37.50
3 $230 $100 $130 $33 $43 $77 $1.67
4 $300 $100 $200 $25 $50 $75 $17.50
5 $400 $100 $300 $20 $60 $80 $20.00

Using the table above, explain what happens to ATC when MC > ATC, MC<ATC, and MC = ATC

Total output Cost TFC TVC AFC AVC ATC MC
0 $20 $20
10 $40 $20 $20 $2.00 $2.00 $4.00 $2.00
20 $60 $20 $40 $1.00 $2.00 $3.00 $2.00
30 $90 $20 $70 $0.67 $2.33 $3.00 $3.00
40 $120 $20 $100 $0.50 $2.50 $3.00 $3.00
50 $180 $20 $160 $0.40 $3.20 $3.60 $6.00
60 $280 $20 $260 $0.33 $4.33 $4.67 $10.00
Using the table above, find the quanity where MC=ATC. Find the quantity where ATC is at its minimum. Find the quanity that is the most efficient operating point for the firm.

Explain why the short-run marginal-cost curve must interesect the short-run average total cost curve at the mimimum point of the ATC. Does the marginal cost curve intersect the average-variable cost curve at it's mimimum point? What about the average fixed cost curve? Why doesn't the marginal cost curve also interest the average fixed cost curve at it's minimum point:

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Solution Preview

Total output Costs TFC TVC AFC AVC ATC MC
0 $100 $100
1 $150 $100 $50 $100 $50 $150 $50
2 $225 $100 $125 $50 $63 $113 $37.50
3 $230 $100 $130 $33 $43 $77 $1.67
4 $300 $100 $200 $25 $50 $75 $17.50
5 $400 $100 $300 $20 $60 $80 $20.00
Using the table above, explain what happens to ATC when MC > ATC, MC

When MC > ATC, an additional unit of output will incur higher costs than the average. Therefore, the average total cost will rise by adding that unit of output.

Total output Cost TFC TVC AFC AVC ATC MC
0 $20 $20
10 $40 $20 $20 $2.00 $2.00 $4.00 $2.00
20 $60 $20 $40 $1.00 $2.00 $3.00 $2.00 ...

Solution Summary

The short-run marginal-cost curve is assessed.

$2.19
Similar Posting

Short-run marginal cost curves

1. If the government imposes a $1 per-unit tax, how do the marginal, average total, and average variable costs change? What if instead the government imposes a $100 per-firm tax?

2. a) Why are short-run marginal cost curves expected to slope upward?
b) If you know that average costs are increasing, is the marginal cost curve above or below the average cost curve?
c) If you know that marginal costs are increasing, is it necessarily true that the average cost curve is below marginal cost?
d) Why does the average total cost curve always start above the marginal cost curve in the short run?
e) If marginal cost is equal to average cost, what do you know about that point on the average cost curve? Why?

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