1. Explain the relationship between marginal cost and average total cost.

1. Assume a firm has fixed costs of RM80 and variable costs as indicated in the table below. Complete the cost table.

Total Product

Total Variable Cost (TVC)

Total Cost (TC)

Average Fixed Cost (AFC)

Average Variable Cost (AVC)

Average Total Cost (ATC)

Marginal Cost (MC)

0

RM0

RM80

1

110

190

2

150

230

3

180

260

4

220

300

5

270

350

6

340

420

7

440

520