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A firm has fixed costs of $60 and variable costs as indicated in the table on the following. Complete the table.
1.Graph total fixed cost, total variable cost, and total cost. Explain how the law of diminishing returns influences the shapes of the variable-cost and total-cost curves.
2.Graph AFC, AVC, ATC, and MC. Explain the derivation and shape of each of these four curves and their relationships to one another. Specifically, explain in nontechnical terms why the MC curve intersects both the AVC and the ATC curves at their minimum points.
3.Explain how the location of each curve graphed in question b would be altered if (1) total fixed cost had been $100 rather than $60 and (2) total variable cost had been $10 less at each level of output.
||Total Fixed Cost
||Total Variable Cost
||Average Fixed Cost
||Average Variable Cost
||Average Total Cost