Ty grows pumpkins. When Ty leases 1 field for $60 a day and capital for $40 a day, his average total cost curve is ATC₁. When Ty leases 2 fields for $120 a day and capital for $80 a day, his average total cost curve is ATC₂2 Draw a point on Ty's average cost curve such that he will use 1 field to grow any smaller quantity and 2 fields to grow any larger quantity. Ty's long-run average cost curve is OA. the same as his ATC, curve OB. the same as his ATC₂ curve OC. made up of the segments of his ATC, and ATC₂ curves that have the higher average total cost OD. made up of the segments of his ATC, and ATC₂ curves that have the lower average total cost 2.50 2.00- 1.50 1.00 ATC₁ Average total cost (dollars per pumpkin) 050- 0.00+ 0 ATC₂ 200 400 600 800 1000 1200 1400 Quantity (pumpkins per day)

Ty grows pumpkins. When Ty leases 1 field for $60 a day and capital for $40 a day, his average total cost curve is ATC₁. When Ty leases 2 fields for $120 a day and capital for $80 a day, his average total cost curve is ATC₂2 Draw a point on Ty's average cost curve such that he will use 1 field to grow any smaller quantity and 2 fields to grow any larger quantity. Ty's long-run average cost curve is OA. the same as his ATC, curve OB. the same as his ATC₂ curve OC. made up of the segments of his ATC, and ATC₂ curves that have the higher average total cost OD. made up of the segments of his ATC, and ATC₂ curves that have the lower average total cost 2.50 2.00- 1.50 1.00 ATC₁ Average total cost (dollars per pumpkin) 050- 0.00+ 0 ATC₂ 200 400 600 800 1000 1200 1400 Quantity (pumpkins per day)

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 33CTQ: Average cost curves (except for avenge fixed cost) tend to be U-shaped, decreasing and then...

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Average cost curves (except for avenge fixed cost) tend to be U-shaped, decreasing and then increasing. Marginal cost curves have the same shape, though this may be harder to see since most of the marginal cost curve is increasing. Why do you think that average and marginal cost curves have the same general shape?
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