Good Faith Effort 16 -- Short-Run Costs

  1. If the marginal cost of production is increasing, does this tell you whether the average variable cost is increasing or decreasing? Explain.
  2. If the marginal cost of production is greater than the average variable cost, does this tell you whether the average variable cost is increasing or decreasing? Explain.
  3. If the firm's average cost curves are U-shaped, why does its average variable cost curve achieve its minimum at a lower level of output than the average total cost curve? Explain.

Due 17 October.


Note: In order to receive a "credit" grade, your written responses to the questions must be submitted by you personally (not by some other student) by the start of class on the day it is due.

 

Adapted from Questions for Review, Chapter 7, Robert Pindyck and Daniel Rubinfeld, Microeconomics, 4th edition, Prentice Hall, Upper Saddle River, NJ, 1998.