Complete the table below, which represents the production costs for a typical firm. (Round numbers to the nearest tenth.)

TP TFC TVC TC AFC AVC ATC MC
0 $20 $ 0 $__ --- --- --- ---
1 ___ 27.5 ___ $__ $__ $__ $27.5
2 ___ 46.8 ___ ___ 23.4 ___ ___
3 ___ 63.3 ___ ___ ___ ___ ___
4 ___ 82.5 ___ 5.0 ___ ___ ___
5 ___ 106.7 126.7 ___ ___ ___ ___
6 ___ 139.7 ___ ___ ___ ___ ___
7 ___ 181 ___ ___ ___ 28.7 ___

At what level of output do diminishing returns set in? How do you know?

TP TFC TVC TC AFC AVC ATC MC
0 $20 $ 0 $20 --- --- --- ---
1 20 27.5 47.5 $20 $27.5 $47.5 $27.5
2 20 46.8 66.8 10 23.4 33.4 19.3
3 20 63.3 83.3 6.7 21.1 27.8 16.5
4 20 82.5 102.5 5 20.6 25.6 19.2
5 20 106.7 126.7 4 21.3 25.3 24.2
6 20 139.7 159.7 3.3 23.3 26.6 33
7 20 181 201 2.9 25.9 28.7 41.3

Diminishing returns set in between 3 units and 4 units of output. This is the point at which marginal costs begin to increase.