Question

Jane's Juice Bar has the following cost schedules:

In the following table, complete the marginal cost, average variable cost, and average total cost columns.

Quantity	Variable Cost	Total Cost	Marginal Cost	Average Variable Cost	Average Total Cost
(Vats of juice)	(Dollars)	(Dollars)	(Dollars)	(Dollars)	(Dollars)
0	0	30
1	10	40
2	25	55
3	45	75
4	70	100
5	100	130
6	135	165

On the following graph, use the orange points (square symbol) to plot the marginal-cost curve for Jane's Juice Bar. (Note: Be sure to plot from left to right and to plot between integers. For example, if the marginal cost of increasing production from 1 vat of juice to 2 vats of juice is $5, then you would plot a point at (1.5, 5).) Then use the purple points (diamond symbol) to plot the average-variable cost curve starting at 1 vat of juice, and use the green points (triangle symbol) to plot the average-total-cost curve also starting at 1 vat of juice.

Marginal CostAverage Variable CostAverage Total Cost01234564035302520151050CostsQuantity (Vats of juice)

Which of the following statements are true according to the previous graph? Check all that apply.

The marginal-cost curve lies below the average-variable-cost curve.

The marginal-cost curve is above the average-total-cost curve when output is greater than four and average total cost is rising.

The marginal-cost curve is below the average-total-cost curve when output is greater than four and average total cost is rising.

Answer 1

Quantity	Variable Cost	Total Cost	Marginal Cost	Average variable cost	Average total cost
0	0	30	-	-	-
1	10	40	10	10	40
2	25	55	15	12.5	27.5
3	45	75	20	15	25
4	70	100	25	17.5	25
5	100	130	30	20	26
6	135	165	35	22.5	27.5

Marginal cost = Change in total cost/ Change in units.

Average variable cost = total variable cost/ units

Average total cost = total cost/ units

The marginal cost curve lies bemow the average variable cost curve. False.

The marginal cost curve is above the average total cost curve when the output is greater than four and average total cost is rising. True.

The marginal cost curve is below the average total cost curve when the output is greater than four and average total cost is rising. False.