(Transcript of audio with descriptions. Transcript includes narrator headings and description headings of the visual content)
(Speaker)
In the last part of the problem, you are asked to label AVC, MC, and ATC in a graph.
(Description)
The coordinate plane with the horizontal x-axis and the vertical y-axis is drawn. The horizontal axis is labeled as Quantity of cars. It is measured from 0 to 12 million in increments of 2 with a break between 0 and 2.
The vertical axis is labeled as Cost of car. It is measured from 0 to 600 thousand dollars in increments of 100 thousand dollars with a break between 0 and 100 thousand dollars.
Three different lines are drawn.
The first line intersects the second and the third line.
The second line starts at a high cost and low levels of production. It ends at a low cost for high levels of production.
The third line line below the second line.
The following text is written above the diagram:
On the diagram below label the manufacturer's AVC, ATC, and MC curves.
(Speaker)
We are going to start by labeling the MC line first. This is perhaps the easiest line as it is the only line to intersect both ATC and ABC lines.
(Description)
The first line is labeled as MC.
(Speaker)
Next we are going to identify the ATC line. We can find ATC line, because it will always be greater that AVC. Recall, that ATC is the sum of both average variable cost and average fixed cost. ATC starts at a high value as the firm has a higher average fixed cost at low levels of production.
(Description)
The second line is labeled as ATC.
(Speaker)
The last line we need to label is the AVC line. This line will always lie under average total cost.
(Description)
The third line is labeled as AVC.