Economics, 3rd Edition

Berit’s Cost Curves

Many firms, like Berit’s Bagel Bin, experience increasing marginal product before diminishing marginal product and, therefore, have 

cost curves shaped like those in this figure. Panel (a) shows how total cost (TC) depends on the quantity produced. Panel (b) shows 

how average total cost (ATC), average fixed cost (AFC), average variable cost (AVC) and marginal cost (MC) depend on the quantity 

produced. These curves are derived by graphing the data from the table. Notice that marginal cost and average variable cost fall for a 

while before starting to rise.

€18.00

€3.00

2.50

2.00

1.50

1.00

0.50

0

2

4

6

8

10

12

14

16.00

14.00

12.00

10.00

8.00

6.00

4.00

2.00

0

2

4

6

8

Quantity of output (bagels per hour)

Quantity of output (bagels per hour)

10

12

14

Total

cost

Costs

(a) Total cost curve

(b) Marginal and average cost curves

MC

TC

ATC

AVC

AFC