Given the table below: Explain the derivation and shape of each of these four curves and their relationships to one another. Specifically, explain in non-technical terms why the MC curve intersects both the AVC and ATC curves at their minimum points. Explain how the location of each curve graphed in question 3(b) would be altered if (1) total fixed cost had been $100 rather than $60 and (2) total variable cost had been $10 less at each level of output. TotalProduct TotalFixedCost ($) TotalVariableCost ($) TotalCost ($) Average FixedCost ($) Average Variable Cost ($) Average TotalCost ($) Marginal Cost ($)0 60 0 60        1 60 45 105 60.00 45.00 105.00 452 60 85 145 30.00 42.50 72.50 403 60 120 180 20.00 40.00 60.00 354 60 150 210 15.00 37.50 52.50 305 60 185 245 12.00 37.00 49.00 356 60 225 285 10.00 37.50 47.50 407 60 270 330 8.57 38.57 47.14 458 60 325 385 7.50 40.62 48.12 559 60 390 450 6.67 43.33 50.00 6510 60 465 525 6.00 46.50 52.50 75Shown are the related cost curves:    Identify which curve refers to:Variable Curve Variable CurveTotal costs Average total costs Variable costs Average variable costs Fixed costs Average fixed costs     Marginal costs

The four curves in question are the Marginal Cost (MC), Average Variable Cost (AVC), Average Total Cost (ATC), and Average Fixed Cost (AFC) curves.

1. The Marginal Cost (MC) curve represents the cost of producing one additional unit of output. It is derived from the change in total cost when output is increased by one unit. The MC curve is U-shaped because of the law of diminishing returns - initially, adding more units of a variable input (like labor) to a fixed input (like capital) will increase output at an increasing rate. But after a certain point, adding more of the variable input will still increase output, but at a decreasing rate.

2. The Average Variable Cost (AVC) curve represents the variable cost per unit of output. It is derived by dividing total variable cost by the quantity of output. The AVC curve is also U-shaped for the same reason as the MC curve - the law of diminishing returns.

3. The Average Total Cost (ATC) curve represents the total cost per unit of output. It is derived by dividing total cost (fixed costs + variable costs) by the quantity of output. The ATC curve is U-shaped because it is the sum of the AVC and AFC curves.

4. The Average Fixed Cost (AFC) curve represents the fixed cost per unit of output. It is derived by dividing total fixed cost by the quantity of output. The AFC curve is always declining because as output increases, the same amount of fixed cost is spread over more and more units of output.

The MC curve intersects the AVC and ATC curves at their minimum points because when average cost is at a minimum, the cost of the last unit produced (marginal cost) must equal the cost per unit (average cost). If marginal cost were lower than average cost, then producing one more unit would lower average cost. If marginal cost were higher than average cost, then producing one more unit would raise average cost.

If total fixed cost had been $100 rather than$60, the AFC and ATC curves would shift upward because fixed cost per unit and total cost per unit would be higher at each level of output. The MC and AVC curves would not be affected because they are derived from variable cost, not fixed cost.

If total variable cost had been $10 less at each level of output, the AVC, ATC, and MC curves would shift downward because variable cost per unit, total cost per unit, and the cost of the last unit produced would be lower at each level of output. The AFC curve would not be affected because it is derived from fixed cost, not variable cost.