Answer to Question #154132 in Microeconomics for Muhammad Talha

Question

Q.No.7 A juice company has the following cost

Q(VATS) VARIABLE COST TOTAL COST

0 $0 $30

1 10 40

2 25 55

3 45 75

4 70 100

5 100 130

6 135 165

a. Calculate average variable cost, average total cost, and marginal cost for each quantity.

b. Graph all three curves. What is the relationship between the marginal-cost curve and the average total-cost curve? Between the marginal-cost curve and the average-variable-cost curve? Explain.

Relation between Marginal Cost and Average Total Cost: When A.T.C declines, the M.C is less than the A.T.C but when Average Total Cost increases the Marginal Cost is greater than A.T.C. Relation between Marginal Cost and Average Variable Cost: Both Marginal Cost and Average Variable Cost are intersecting at the minimum point and at the intersection they both are equal.

Answer 1

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