workersouputmarginal product total costaverage total costmarginal cost0002000$012020300$15$525030400$8$3.3339040500$5.56$2.50412030600$5$3.33514020700$5$5615010800$5.33$1071555900$5.8$20a.) can you explain dimisnishing marginal product based on those numbers? b.) compare the column for average total coat and the column for marginal cost. Explain the relationship.

Question
Asked Nov 7, 2019

workers

ouput marginal product  total cost average total cost marginal cost
0 0 0 200 0 $0
1 20 20 300 $15 $5
2 50 30 400 $8 $3.33
3 90 40 500 $5.56 $2.50
4 120 30 600 $5 $3.33
5 140 20 700 $5 $5
6 150 10 800 $5.33 $10
7 155 5 900 $5.8 $20

a.) can you explain dimisnishing marginal product based on those numbers? 

b.) compare the column for average total coat and the column for marginal cost. Explain the relationship. 

check_circleExpert Solution
Step 1

The relationship between average total cost and marginal cost can be explain with the help of a diagram. The following diagram represent this relationship where, we draw a marginal cost (MC) curve and an average total cost (ATC) curve against the output in units.

20
15
10
5
A
0
40
60
80
120
160
100
140
180
Average total cost
Marginal cost
20
n
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20 15 10 5 A 0 40 60 80 120 160 100 140 180 Average total cost Marginal cost 20 n

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Step 2

The diagram shows the following relationship as explained below:

  • When ATC falls, MC is lower than ATC.

When average cost fall, marginal cost is less than ATC. In figure, ATC is falling till point A, and MC continues to be lower than ATC.

  • When ATC starts rising, marginal cost is greater than average total cost. In figure, ATC starts rising from point A and beyond A, MC is higher than ATC.
  • When average total cost doesn’t change, then MC = ATC. It happens when falling ATC reaches its lowest point that is, A. Figure shows that MC curve is intersecting ATC curve at its minimum point A.
Step 3

 

Total product is the total amount of final output produced by a firm using given resources in a given period of time.

The additional output produced as a ...

Workers Marginal product Total product
1
20
20
2.
30
50
40
90
120
4
30
140
5
20
6
10
150
155
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Workers Marginal product Total product 1 20 20 2. 30 50 40 90 120 4 30 140 5 20 6 10 150 155

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