A firm producing bikes has the following short run cost structure.(Cost data is in $’s.) Fill in the table below. Use the data below to answer thefollowing:QTC012345678910AVCATCMC250280300310320340370410460520590a) The MC = ________ at Q = 2 and the MC = __________ at Q = 3. Did the MC increaseor decrease? Explain why.b) Did the AVC increase or decrease as Q increased from 7 to 8 units? As a result can weconclude that the corresponding MC must be higher or lower than AVC? Briefly explain.c) From the costs in the table above it can be assumed that production at this firm is subjectto diminishing returns. Answer true or false and briefly explain.d) Is the minimum AVC called the shutdown price of the firm?State true or false and briefly explain.
