ECON 203 Study Guide - Quiz Guide: Average Variable Cost, Marginal Product, Marginal Cost
23 Mar 2019
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You can: marginal cost is rising, marginal cost is falling. average total cost is constant. average fixed cost is rising. infer therefore that fixed costs are: The following chart represents the production function and cost curves for a firm. Assume that capital and labor are paid a constant rental rate and wage. (i) (ii) Plot the mc, avc, afc and atc curves. Plot the general shapes, no need for graph papers. Note: afc can be higher on lower than what has been drawn, but is has to be strictly negatively sloped. 2: explain the relationship between the long-run average cost curve and its associated short-run cost curves. For every conceivable plant size there exists an average cost curve, which defines the minimum average cost of producing a particular output. This average cost curve is generally u-shaped, reflecting increasing and subsequently decreasing productivity for higher outputs. Such short-run average cost curves imply a fixed amount of capital.
