Question

Consider the following scenario to understand the relationship between marginal and average values. Suppose Simone is a professional basketball player, and her game log for free throws can be summarized in the following table.

Fill in the columns with Simone’s free-throw percentage for each game and her overall free-throw average after each game.

Game	Game Result	Total	Game Free-Throw Percentage	Average Free-Throw Percentage
1	6/8	6/8	75	75
2	2/8	8/16
3	2/4	10/20
4	8/10	18/30
5	8/10	26/40

On the following graph, use the orange points (square symbol) to plot Simone’s free-throw percentage for each game individually, and use the green points (triangle symbol) to plot her overall average free-throw percentage after each game.

(? 100 90 Game Free-Throw Percentage 80 70 Average Free-Throw Percentage FREE-THROW PERCENTAGE 30 50 40 30 20 10 0 0 2 3 5 GAME

You can think of the result in any one game as being Simone’s marginal free-throw percentage. Based on your previous answer, you can deduce that when Simone’s marginal free-throw percentage is below the average, the average must be (falling or rising) .

You can now apply this analysis to production costs. For a U-shaped average total cost (ATC) curve, when the marginal cost curve is below the average total cost curve, the average total cost must be (falling or rising) . Also, when the marginal cost curve is above the average total cost curve, the average total cost must be (falling or rising) . Therefore, the marginal cost curve intersects the average total cost curve (at its max, at its minimum, when the ATC is at 0) .

Answer 1

Game Free Throw percentage = Game result * 100

Average Free Throw percentage = Total * 100

Game	Game result	Total	Game Free Throw percentage	Average Free Throw percentage
1	6/8	6/8	75	75
2	2/8	8/16	25	50
3	2/4	10/20	50	50
4	8/10	18/30	80	60
5	8/10	26/40	80	65

90 80 70 60 Game Free Throw percentage 50 40 -Average Free Throw percentage 30 20 10 0 1 2 3 4 5

Blank 1: falling

Blank 2: Falling

Blank 3: rising

Blank 4: at its minimum