3) marginal and average cost curves

Question 1

how do you figure out average costs?

Answer 1

total costs
/
output

Question 2

how do you figure out marginal costs?

Answer 2

change in total costs
/
change in output

Question 3

in terms of marginal costs what does it mean if labour productivity is rising?

Answer 3

we either have specialisation or we are underutilising our factors of production

our marginal costs are falling

our marginal output is rising

Question 4

in terms of marginal costs what does it mean if labour productivity is falling?

Answer 4

its because our fixed FOPs have become a constraint on production

our marginal costs are rising

our marginal output is falling