6 Average Average Average Marginal Fixed Cost Variable Cost Total Cost Cost Variable Total Quantity Fixed Cost Cost Cost 1 100 10 2 100 15 I 3 100 25 4 100 40 5 100 60 6 100 85 7 100 115 8 100 150 9 100 190 10 100 235 Following are the questions you should be able to answer: 1. What happens to Average Fixed Cost as quantity increases? 2. What happens to Average Variable Cost as quantity increases? 3. What happens to Average Total Cost as quantity increases? 4. What is the distance between Average Variable Cost and Average Total Cost? 5. What is the shape of Average Total Cost? Why is it shaped that way? (In other words, what is going on until Q=7? What happens after Q=7?) 6. What is the relationship between Marginal Cost and Average Total Cost? 7. What is the relationship between Marginal Cost and Average Variable Cost? 8. What happens to Average Total Cost in the Long Run? What is the shape? Why