HAT Manifesto Part 1/3 - Rubric Cube - 250803 edit

 Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 5 Firm Behavior and the Organization of Industry

Chapter 13 of 36 – The Costs of Production

Section 19 of 23

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Table 2 here

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Figure 4 here

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Whenever Marginal Cost (MC)

· is less than Average Total Cost (ATC), ATC is falling

· is greater than ATC, ATC is rising

This can be seen when comparing

· columns 7 and 8 in Table 2

· MC and ATC curves on Figure 4

This relationship between MC and ATC means

· the MC curve crosses the ATC curve

· at the ATC minimum point

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As the MC rises

· at low levels of output, MC is below ATC, so ATC is falling

· as level of output increases the two curves cross

· at high levels of output, MC is above ATC, so ATC is rising

Note on Table 2 and Figure 4, when increasing quantity from 4 to 7

· ATC moves from $1.35 down to $1.30 then up to $1.33

· MC moves from $1.10 to $1.50

· ATC and MC intersect at $1.30, between quantity 5 and 6

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