Question: Question 2: A. Output Total cost Total Marginal Average Average (TC) Variable Cost Cost (AV) Variable Cost (TVC) (MC) Cost (AVC) 0 40 40 68

Question 2: A. Output Total cost Total Marginal Average Average (TC) Variable Cost Cost (AV) Variable Cost (TVC) (MC) Cost (AVC) 0 40 40 68 3 128 B. Is the firm operating in the short run or long run? Explain. The answer is the average variable cost is equal to the average cost minus the average fixed cost. The average cost has two components in the short run. They are the average fixed cost and the average variable cost

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