Compare the column for average total cost with the column for marginal cost.Explain the relationship. Average total cost: 0, 15, 8, 5.56, 5, 5, 5.33, 5.81 Marginal cost: 0, 5, 3.33, 2.5, 3.33, 5, 10, 20

The relationship between average total cost (ATC) and marginal cost (MC) is guided by the following principles:

1. When MC is less than ATC, ATC is decreasing.
2. When MC is more than ATC, ATC is increasing.
3. MC crosses ATC at its lowest point.

Looking at the given data:

Average total cost: 0, 15, 8, 5.56, 5, 5, 5.33, 5.81 Marginal cost: 0, 5, 3.33, 2.5, 3.33, 5, 10, 20

We can see that initially, the MC is less than the ATC, and the ATC is decreasing. When the MC equals the ATC (at 5), the ATC is at its lowest point. After this point, the MC is greater than the ATC, and the ATC starts to increase. This pattern is consistent with the principles outlined above.

This relationship is due to the fact that the ATC is an average, taking into account all units produced, while the MC only considers the cost of the last unit produced. When the cost of producing the last unit (MC) is less than the average cost (ATC), it brings the average down. Conversely, when the MC is more than the ATC, it pulls the average up.