Question

Healthy Harry’s Juice Bar has the following cost
schedules:
Q (VATS) VARIABLE COST TOTAL COST
0 $ 0 $ 30
1 10 40
2 25 55
3 45 75
4 70 100
5 100 130
6 135 165
a. Calculate average variable cost, average total cost,
and marginal cost for each quantity.
b. Graph all three curves. What is the relationship
between the marginal-cost curve and the averagetotal-
cost curve? Between the marginal-cost curve
and the average-variable-cost curve? Explain.

Answer 1

Answer:

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Explanation:

a) Q TVC TC AC AVC MC 0 0 30 - - - 1 10 40 40 10 10 2 25 55 27.5 12.5 15 3 45 75 25 15 20 4 70 100 25 17.5 25 5 100 130 26 20 30 6 135 165 27.5 22.5 35 b) Relation betweenmarginal-cost curve and the average total- cost curve 1.When the average total cost declines, the marginal cost is less than the average cost. 2.When the average total cost increases, the marginal cost is greater than the average cost. 3. When the average total cost stays the same (is at a minimum or maximum), the marginal cost equals the average cost. Relation