Answer :
Analyzing the graph, we can see that initially, as the quantity of bagels increases, the cost decreases due to spreading the fixed cost over more units.
To complete the table and plot the data in one graph, we will calculate the average fixed cost, average variable cost, average total cost, and marginal cost based on the given fixed cost and variable cost information.
Quantity of Bagels represents the number of units produced, while Total Cost represents the sum of Fixed Cost and Variable Cost.
Now, let's plot the data on a graph:
The x-axis represents the Quantity of Bagels, and the y-axis represents the costs.
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$14 | Marginal Cost
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$12 | ----
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$10 | /
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$8 | /
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$6 | /
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$4 | /
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$2 | /
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$0 |-----------------------
0 5 10 15 20
Quantity of Bagels
The graph shows the different cost curves:
Average Fixed Cost (AFC) curve starts high but decreases as the quantity of bagels increases, as the fixed cost is spread over more units.
Average Variable Cost (AVC) curve starts low but increases as the quantity of bagels increases, indicating diminishing returns.
Average Total Cost (ATC) curve is the sum of AFC and AVC and exhibits a U-shaped curve.
Marginal Cost (MC) curve intersects the AVC and ATC curves at their minimum points, indicating the change in cost for producing one additional unit.
Analyzing the graph, we can see that initially, as the quantity of bagels increases, the cost decreases due to spreading the fixed cost over more units. However, after a certain point, the diminishing returns of variable cost start to outweigh the benefit of spreading fixed costs, causing the average cost to increase.
Understanding cost behavior is essential for decision-making in business, such as pricing, production planning, and profit analysis. The graph provides insights into the relationship between the quantity produced and the associated costs, allowing businesses to optimize their production levels and pricing strategies to maximize profitability.
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