Can you calculate the value of all cells marked with a letter. This includes A,B,C,D
Considering this table, for the range depicted, as quantity rises
a.) ATC rises because AVC is rising
b.) ATC falls because AFC is falling
c.) ATC rises because AFC is rising
d.) ATC falls because AVC is falling
Homework Answers
A = ATC* Q = 200*10 = 2000
B= (Change in TC)/Change in Quantity
= (2600-2000)/(300-200) = $6
C = ATC *Q = $8.5*400 = $3400
D = Change in TC/Change in Q
= (3400-2600)/(400-300)
= $8
you can see with the increase in quantity the average total cost is reducing as a result of which I can understand that ATC falls.
Because ATC falls
(a,c) are wrong.
this is because fixed cost is always constant and with the increase in quantity the average fixed cost reduces as a result of which it is also reduces where variable cost has a minimal effect in this scenario
Therefore (b) is the answer to this question
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