1. The table represents the costs of a firm. Assume that each hired workers costs $10 per month.

(a) Complete the table (rounding to 2 decimal places).

Labour Output TFC [1] TVC [1] TC[1] MC [2] AFC [1] AVC [1] ATC [1]

0 0 100.00 - 100.00 - - - -

1 15 100 10 110 10 6.67 0.67 7.33

2 34 100 20 120 10 2.94 0.59 3.53

3 48 100 30 130 10 2.08 0.63 2.71

4 60 100 40 140 10 1.67 0.67 2.33

5 62 100 50 150 10 1.61 0.81 2.42

(b) Sketch the AVC, ATC and MC curves of the firm on a clearly labelled diagram.

(c) Briefly explain if the above firm is operating in the short run or long run?

(d) Briefly explain the relationship between the MC curve and the short-run AVC and ATC curve.