micro p286 111504

micro p286 111504 - versa. f) When Marginal Cost is less...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Adam Petrone-ID #000490127 11/15/04 MicroEconomics Prof. Sattinger p. 286 #5, 10 5. Workers Output Marginal Product Total Cost ATC Marginal Cost 0 0 0 1 20 20 300 15 0.75 2 50 30 400 8 0.16 3 90 40 500 5.56 0.06 4 120 30 600 5 0.04 5 140 20 700 5 0.04 6 150 10 800 5.33 0.04 7 155 5 900 5.81 0.04 a) The marginal products increase until a fourth worker is introduced and then the marginal products start to decrease. This is the property of diminishing marginal product. This may be the case if there is not enough equipment for all the workers to use efficiently together and production slows down. b) c) As the amount of workers increases the average total cost falls until it levels out at $5 for four and five workers and then it starts to increase again. d) As the amount of workers increases the marginal cost decreases until it hits $2.5 and then it rises again. e) If Marginal product is increasing, then marginal cost is decreasing, and vice-
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: versa. f) When Marginal Cost is less than average total cost, average total cost is falling and vice-versa. 10. Q variable cost total cost AVC ATC marginal cost 30 1 10 40 10 40 10 2 25 55 12.5 27.5 15 3 45 75 15 25 20 4 70 100 17.5 25 25 5 100 130 20 26 30 6 135 165 22.5 27.5 35 b) AVC ATC and MC 5 10 15 20 25 30 35 40 45 0 1 2 3 4 5 6 Quantity Price AVC ATC MC When the MC curve is less than the ATC curve, the ATC is falling. Whent eh MC curve is above the ATC curve, the ATC is rising. If the MC is less than the ATC then it will raise the ATC. The MC curve crosses the ATC curve at its minimum. At low levels of output, MC is below ATC, so ATC is falling....
View Full Document

This note was uploaded on 04/28/2008 for the course ECO 110 taught by Professor Liugang during the Fall '08 term at SUNY Albany.

Page1 / 2

micro p286 111504 - versa. f) When Marginal Cost is less...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online