Sandra and Trey operate a small company that produces souvenir footballs. Their fixed cost is $2,000 per month.

They can hire workers for $1,000 per worker per month.

Their monthly production function for footballs is as given in the accompanying table.

a. For each quantity of labor, calculate average variablecost (AVC), average fixed cost (AFC), average total cost (ATC), and marginal cost (MC).

b. On one diagram, draw the AVC, ATC, and MC curves.

c. At what level of output is Sandra and Trey’s average total cost minimized?

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Quantity of labor (workers) Quantity of footballs 0 1 2 0 300 800 3 1,200 4 1,400 5 1,500