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You have the information shown in the accompanying table about a firm's costs. Complete the missing data.
Quantity
TC
MC
ATC
AVC
0
$20
-
1
?
2
$10
3
$16
4
5
$24
The accompanying table contains the complete cost data. The total cost of producing one unit of output is the total cost of producing zero units of output plus the marginal cost of increasing output from zero to one, and so forth. The average total cost is just the total cost divided by output. Since the total cost of producing zero output is $20, the variable cost is TC - $20. The average variable cost is then just the variable cost divided by output.
$40
$50
$25
$15
$66
$22
$15.33
$86
$21.50
$16.50
$110
$18
Evaluate each of the following statements. If a statement is true, explain why; if it is false, identify the mistake and try to correct it.
a. A decreasing marginal product tells us that marginal cost must be rising.
b. An increase in fixed cost increases the minimum-cost output.
c. An increase in fixed cost increases marginal cost.
d. When marginal cost is above average total cost, average total cost must be falling.
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