Table 13-9

$$\begin{array} { | c | c | c | c | }
\hline \begin{array} { c }
\text { Labor } \
\text { (Number of w orkers) }
\end{array} & \begin{array} { c }
\text { Output } \
\text { (Units) }
\end{array} & \begin{array} { c }
\text { Fixed Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c }
\text { Variable Cost } \
\text { (Dollars) }
\end{array} \
\hline 0 & 0 & 30 & 0 \
\hline 1 & 100 & 30 & 15 \
\hline 2 & 180 & 30 & 30 \
\hline 3 & 240 & 30 & 45 \
\hline 4 & 280 & 30 & 60 \
\hline 5 & 300 & 30 & 75 \
\hline
\end{array}$$
-Refer to Table 13-9. For the firm whose production function and costs are specified in the table, its average-total-cost curve is
A)constant.
B)decreasing.
C)increasing.
D)U-shaped.

Question

Table 13-9
​
​
 $$\begin{array} { | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Labor } \
\text { (Number of w orkers) }
\end{array} & \begin{array} { c } 
\text { Output } \
\text { (Units) }
\end{array} & \begin{array} { c } 
\text { Fixed Cost } \
\text { (Dollars) }
\end{array} & \begin{array} { c } 
\text { Variable Cost } \
\text { (Dollars) }
\end{array} \
\hline 0 & 0 & 30 & 0 \
\hline 1 & 100 & 30 & 15 \
\hline 2 & 180 & 30 & 30 \
\hline 3 & 240 & 30 & 45 \
\hline 4 & 280 & 30 & 60 \
\hline 5 & 300 & 30 & 75 \
\hline
\end{array}$$
-Refer to Table 13-9. For the firm whose production function and costs are specified in the table, its average-total-cost curve is
A)constant.
B)decreasing.
C)increasing.
D)U-shaped.

Quizplus · Accepted Answer

The average total cost (ATC) is calculated by adding the fixed cost and variable cost and then dividing by the output. As the number of workers increases, initially, the ATC decreases because the output increases at a faster rate than costs. However, after a certain point, the output increases at a decreasing rate, leading to an increase in ATC. This creates a U-shaped ATC curve, where ATC decreases initially due to economies of scale and then increases due to diseconomies of scale.

Table 13-9 ​ ​ -Refer to Table 13-9

Table 13-9

-Refer to Table 13-9