Let's analyze the given table and the marginal costs for each production level:
1. Production Level: 0, Total Cost: \[tex]$0.00, Marginal Cost: Not applicable.
2. Production Level: 1, Total Cost: \$[/tex]1.00, Marginal Cost: \[tex]$1.00.
3. Production Level: 2, Total Cost: \$[/tex]1.50, Marginal Cost: \[tex]$0.50.
4. Production Level: 3, Total Cost: \$[/tex]1.75, Marginal Cost: \[tex]$0.25.
5. Production Level: 4, Total Cost: \$[/tex]2.25, Marginal Cost: \[tex]$0.50.
6. Production Level: 5, Total Cost: \$[/tex]3.50, Marginal Cost: \[tex]$1.25.
7. Production Level: 6, Total Cost: \$[/tex]5.00, Marginal Cost: \[tex]$1.50.
The marginal cost is calculated as the change in total cost when production increases by one unit.
Now, let's answer the specific observations:
1. Initially decreases as production increases:
- The marginal cost decreases from \$[/tex]1.00 (from 0 to 1 units) to \[tex]$0.50 (from 1 to 2 units) and then to \$[/tex]0.25 (from 2 to 3 units).
- This indicates that the marginal cost does initially decrease as production increases.
2. Eventually increases as production decreases:
- From 4 to 5 units, the marginal cost increases from \[tex]$0.50 to \$[/tex]1.25.
- From 5 to 6 units, it increases again from \[tex]$1.25 to \$[/tex]1.50.
- This indicates that the marginal cost eventually increases as production decreases.
To summarize based on the observations and the resulting pattern of costs:
- The marginal cost initially decreases as production increases.
- The marginal cost eventually increases as production decreases.
So, the correct answers are:
1. The marginal cost initially decreases as production increases.
2. The marginal cost eventually increases as production decreases.
