The table given below shows the average total cost of production of a firm at di

Question

The table given below shows the average total cost of production of a firm at different levels of the output.

Table 8.5

Quantity

Average Total Cost

1

$10

2

$6

3

$5

4

$5

5

$7

Refer to Table 8.5. At what level of production will the average total cost curve intersect the marginal cost curve?

1 unit

2 units

4 units

3 units

5 units

The table given below shows the average total cost of production of a firm at different levels of the output.

Table 8.5

Quantity

Average Total Cost

1

$10

2

$6

3

$5

4

$5

5

$7

Explanation / Answer

Total Cost

Average Total Cost * Quantity

Marginal Cost

Change in Total Cost / Change in Quantity

So as you see at 4 unit level of production will the average total cost curve intersect the marginal cost curve.

Quantity Average Total Cost

Total Cost

Average Total Cost * Quantity

Marginal Cost

Change in Total Cost / Change in Quantity

1 $10 $10 - 2 $6 $12 $2 3 $5 $15 $3 4 $5 $20 $5 5 $7 $35 $15

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