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hw 5 2 questions on average variable costs

hw 5 2 questions on average variable costs - the same value...

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Ryan Hayes ECO 201 Homework 5 11/3/09 1) We know that from the graph on the right that if marginal cost (MC) is less than the average variable cost (AVC), then the AVC variable cost will FALL and vice versa. But what if they are equal? This would be when the average variable cost would have a slope of 0 or horizontal. So when average variable costs are constant, that is when the MC=AVC. Marginal Cost and Average Variable cost would be
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Unformatted text preview: the same value, and they would both be a horizontal line, as shown below. 3. If Average Variable Costs are constant, that means that it is a straight horizontal line. So if Average fixed costs are not 0, that means that the Average Total Cost will also be a straight horizontal line, that is parallel from average variable costs. It will look something like the picture on the right. ATC=AFC+AVC...
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