Mini lessons / Microeconomics / 3.2
3.2 Short-run costs, part 2: the curves and why MC falls, then rises
Hire workers one at a time and watch the cost of each extra smoothie fall, then climb.
Step 1 of 6
From the table to the curves
In part 1, MC fell, then rose, and it pulled AVC and ATC along with it. Now let's see why MC behaves that way. It comes straight from marginal product (3.1).
Each worker costs the same wage. If a worker adds a lot of output, the wage is spread over many units, so each extra unit is cheap. If a worker adds little, each extra unit is expensive. So MC = wage ÷ MP.