Chapter 11

You produce widgets. Currently you produce four widgets at a total cost of $\mathrm{\$}40$. a. What is your average total cost? b. Suppose you could produce one more (the fifth) widget at a marginal cost of $\mathrm{\$}5.$ If you do produce that fifth widget, what will your average total cost be? Has your average total cost increased or decreased? Why? c. Suppose instead that you could produce one more (the fifth) widget at a marginal cost of $\mathrm{\$}20.$ If you do produce that fifth widget, what will your average total cost be? Has your average total cost increased or decreased? Why?

In your economics class, each homework problem set is graded on the basis of a maximum score of 100 . You have completed 9 out of 10 of the problem sets for the term, and your current average grade is $88.$ What range of grades for your 10 th problem set will raise your overall average? What range will lower your overall average? Explain your answer.