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# ch 8 hw - cost \$ 60 \$0 \$60-45 1 60 45 105 40 2 60 85.5 72.5...

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4. Complete the table by calculating marginal product and average product. Inputs of Labor Total Product Marginal Product Average Product 0 0 - - 1 15 15 15 2 34 19 17 3 51 17 17 4 65 14 16.25 5 74 9 14.8 6 80 6 13.33 7 83 3 11.86 8 82 -1 10.25 7. A firm has fixed costs of \$60 and variable costs as indicated in the table at the bottom. Complete the table and check your calculations. a. graph total fixed cost, total variable cost, and total cost. Explain how the law of diminishing returns influences the shapes of the variable-cost and total-cost curves. b. graph AFC, AVC, ATC, and MC. Explain the derivation and shape of each of these four curves and their relationship to one another. Specifically, explain in nontechnical terms why the MC curve intersects both the AVC and the ATC curves at their minimum points. Total Product Total fixed cost Total variable cost Total cost Average fixed cost Average variable cost Average total cost Marginal

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Unformatted text preview: cost \$ 60 \$0 \$60---45 1 60 45 105 60 45 105 40 2 60 85 145 30 42.5 72.5 35 3 60 120 180 20 40 60 30 4 60 150 210 15 37.5 52.5 35 5 60 185 245 12 37 49 40 6 60 225 285 10 37.5 47.5 45 7 60 270 330 8.6 38.6 47.1 55 8 60 325 385 7.5 40.6 48.1 65 9 60 390 450 6.67 43.3 50 75 10 60 465 525 6 46.5 52.5-Total variable cost changes with the level of output. So, total of variable costs changes directly with output. Total fixed cost is independent of the level of output. It does not increase even if a firm produces more. The total cost at any output is the vertical sum of the fixed cost and variable cost at that output. The MC curve cuts through the ATC curve and the AVC curve at their minimum points. When MC is below ATC, ATC falls; when MC is above ATC, ATC rises. Similarly, when MC is below AVC, AVC falls; when MC is above AVC, AVC rises....
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