Total Cost Curve Analysis: Increasing at a Decreasing Rate

Total Cost Curve Analysis: Increasing at a Decreasing Rate

| Labor (Number of workers) | Output (Units) | Fixed Cost (Dollars) | Variable Cost (Dollars) | |---|---|---|---| | 0 | 0 | 30 | 0 | | 1 | 100 | 30 | 15 | | 2 | 180 | 30 | 30 | | 3 | 240 | 30 | 45 | | 4 | 280 | 30 | 60 | | 5 | 300 | 30 | 75 |

Refer to the table above. For the firm whose production function and costs are specified, its total-cost curve is increasing at a decreasing rate.

Explanation:

The total cost is calculated by adding fixed cost and variable cost. As the number of workers increases, the output also increases, but the increase in output becomes smaller with each additional worker. This indicates that the variable cost is increasing at a decreasing rate. Since fixed cost remains constant, the total cost is also increasing at a decreasing rate.