relationship between cost curves

on productivity graph

Labor (L) on horizontal axis Quantity (Q) on vertical axis

Total fixed cost vs. Average fixed cost

TFC doesn't respond to change in Q AFC always decreases as Q increases No relationship between AFC and MC

relationship between marginal physical product and total product

TP increases as MP>0 TP decreases as MP<0 TP no change when MP =0 (maximum)

relationship between average total cost and marginal cost

if MC>ATC, ATC increase if MC<ATC, ATC decrease if MC = ATC, ATC no change, at minimum value

relationship between marginal physical product and average physical product

AP increases as MP >AP AP decreases as MP<AP TP no change when MP =AP (maximum)

relationship between Average Variable Cost and Marginal Cost

AVC decreases when MC<AVC AVC increases when MC>AVC AVC no change when MC=AVC (minimum)

Marginal product can be negative

average physical product can't be negative

Why total variable cost increases as quantity increase

firm must add more variable resources to increase output. Diminishing marginal productivity

The average physical product continues to increase as long as

marginal physical product is greater than the average physical product

Total fixed cost

not related with quantity.

Total product increases as the firm adds more unit of labor as long as

the marginal physical product is positive

relationship between Average physical product and average variable cost

when APP increases, AVC decrease when APP decreases, AVC increase AVC minimized when APP at maximum

relationship between Marginal physical product and marginal cost

when MPP increases, MC decrease When MPP decreases, MC increase MC of producing minimized when MPP is at its maximum.