Using Production Possibilities Curves, Demonstrate Increasing Marginal Opportunity Cost and Constant

question 8

Essay

Using production possibilities curves, demonstrate increasing marginal opportunity cost and constant marginal opportunity cost.

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Definitions:

MC

Marginal Cost, the cost of producing one additional unit of a product or service.

ATC

Average Total Cost; the total cost of production divided by the number of units produced, representing the per-unit production cost.

Average Fixed Costs

Costs that do not vary with the level of output and are averaged over the total number of units produced.

Marginal Costs

The expense associated with manufacturing an extra unit of a product or service.