3. The relationship between marginal and average costs Dismiss All Please Wait .

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3. The relationship between marginal and average costs

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Consider the following scenario to understand the relationship between marginal and average values. Suppose Rajiv is a professional basketball player, and his game log for free throws can be summarized in the following table.

Fill in the columns with Rajiv’s free-throw percentage for each game and his overall free-throw average after each game.

Game

Game Result

Total

Game Free-Throw Percentage

Average Free-Throw Percentage

Points:

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Explanation:

On the following graph, use the orange points (square symbol) to plot Rajiv’s free-throw percentage for each game individually, and use the green points (triangle symbol) to plot his overall average free-throw percentage after each game.

Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.

Created with Raphaël 2.1.2Game Free-Throw PercentageAverage Free-Throw Percentage0123451009080706050403020100FREE-THROW PERCENTAGEGAME

Created with Raphaël 2.1.2

Points:

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Explanation:

falling

rising

Points:

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Explanation:

falling

rising

falling

rising

when the ATC is at 0

at its minimum

at its maximum

3. The relationship between marginal and average costs

Dismiss All

Please Wait . . .

Please Wait...

Consider the following scenario to understand the relationship between marginal and average values. Suppose Rajiv is a professional basketball player, and his game log for free throws can be summarized in the following table.

Fill in the columns with Rajiv’s free-throw percentage for each game and his overall free-throw average after each game.

Game

Game Result

Total

Game Free-Throw Percentage

Average Free-Throw Percentage

1 8/10 8/10 80 80 2 4/10 12/20 3 2/8 14/28 4 2/4 16/32 5 6/8 22/40

Points:

Close Explanation

Explanation:

On the following graph, use the orange points (square symbol) to plot Rajiv’s free-throw percentage for each game individually, and use the green points (triangle symbol) to plot his overall average free-throw percentage after each game.

Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.

Created with Raphaël 2.1.2Game Free-Throw PercentageAverage Free-Throw Percentage0123451009080706050403020100FREE-THROW PERCENTAGEGAME

Created with Raphaël 2.1.2

Points:

Close Explanation

Explanation:

You can think of the result in any one game as being Rajiv’s marginal free-throw percentage. Based on your previous answer, you can deduce that when Rajiv’s marginal free-throw percentage is above the average, the average must be selector 1   

falling

rising

.

Points:

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Explanation:

You can now apply this analysis to production costs. For a U-shaped average total cost (ATC) curve, when the marginal cost curve is below the average total cost curve, the average total cost must be selector 1   

falling

rising

. Also, when the marginal cost curve is above the average total cost curve, the average total cost must be selector 2   

falling

rising

. Therefore, the marginal cost curve intersects the average total cost curve selector 3   

when the ATC is at 0

at its minimum

at its maximum

.

Explanation / Answer

Game free throw Average Free Throw MR 80 80 40 60 -40 25 50 -15 50 50 25 75 55 25 1)rising 2) falling 3) rising ATC at its minimum

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