Suppose that a firm's only variable input is labor. When 50 workers are used, the labor is 50, and the marginal product of the 50th worker is 75. The wage rate is $80, and the total cost of the fixed input is $500.
a. What is average variable cost? Show your calculations.
b. What is the marginal cost? Show your calculations.
c. What is average total cost? Show your calculations.
d. Is each of the following statements true or false? Explain your answers.
a. Marginal cost is increasing
b. Average variable cost is increasing
c. Average total cost is decreasing