5. The relationship between marginal and average costs Consider the following scenario to understand the relationship between marginal and average values. Suppose Nick is a professional basketball player, and his game log for free throws can be summarized in the following table. Fill in the columns with Nick's freethrow percentage for each game and his oveiail freethrow average after each game. Game Game Result Total Game FreeFThrow Percentage Average Free111m Percentage 1 am: 3:10 an an 2 llD 14,!20 E E 3 1,5 15,!25 E E 4 35 13:30 E E 5 Sim 25,!40 E E On the following graph, use the orange points (square symbol) to plclt Nick's 'ee-thrclw percentage for each game individually, and use the green points ( triangle symbol) to plot his overall average freethrew percentage after each game. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. ('3 we -I- on at: Game FreeThrow Percentage m * so Average Free-Throw Percentage FREE-THROW PERCENTAGE 8 1|] GAME You can think of the result in anv one game as being Nick's marginal freethrow percentage. Based on vour previous answer, vou can deduce that when Nick's marginal free-throw percentage is above the average, the average must be 7 . You can now apply.r this analysis to production costs. For a Ushaped average total cost curve, when the marginal cost curve is below the average total cost curve, the average total cost must be v . Also, when the marginal cost curve is above the average total cost curve, the average total cost must be 7 . Therefore, the marginal cost curve intersects the average total cost curve v . You can think of the result in any one game as being Nick's marginal Free-throw percentage. Based on your previous answer; you can deduce that when Nick's marginal free-throw percentage is above the average, the average must be V . You can now apply this analysis to production costs. For a Ushaped average total cost c cost curver the average total cost must be 7 . Also, when the marginal cost :2 ove the average total cost curve, the average total falling -n the marginal cost curve is below the average total cost must be V . Therefore, the marginal cost curve intersects the average to rve V . You can think of the result in anlur one game as being Nick's marginal Free-throw percentage. Based o e that when Nick's marginal freethrow percentage is above the averager the average must be 7 . when the average total cost is at 0 You can now apply' this analvsis to production costs. For a Ushaped average total cost curve, when I . _ -rage total _ _ at Its maxrmum cost curve, the average total cost must be V . Also, when the marginal cost curve Is above *ge total cost must be V . Therefore, the marginal cost curve intersects the average total cost curve V