Average Total Cost, Marginal Cost, and ATC
Suppose that the firm's only variable input is labor. When 50 workers are used, the average product of labor is 50 and the marginal product of 50th worker is 75. The wage rate is $80 and the total cost of the fixed input is $500.
- What is average total cost?
- What is the marginal cost?
- What can you say about ATC (increasing, decreasing)? What can you say about Marginal Cost (increasing, decreasing)?