Marginal and Average Cost Curves

Question 1

MC

Answer 1

change in TC/ Change in Q(MP)

Question 2

Idea of Diminishing returns

Answer 2

• Increasing workers = decreased cost at first
• After that trough point, marginal product decreased, so marginal costs rise

Question 3

why does AC change a bit after

Answer 3

because it includes fixed costs, which do not change regardless of a change in output, so the value is different to MC.

Question 4

As labour productivity rises

Answer 4

MC falls