Question

Output tables/day	Total cost	Variable cost	Average Total Cost	Average variable cost	Marginal Cost
0	$250
1	350
2	430
3	490
4	570
5	670
6	820

1. What are the fixed costs of production measured in dollars?
2. For 6 tables, what is the average fixed cost, average variable cost, and the marginal cost?

Answer 1

a)

FC=the cost is same at all level and it is equal to the total cost at Q=0

FC=$250

=======

b)

VC=TC-FC

VC(1)=350-250=100 and so on

ATC=TC/Q
ATC first decreases up to the MC is lower than it and then increases when MC is higher than it.

ATC(1)=350/1=350

ATC(2)=430/2=215 and so on

AVC=VC/Q
AVC first decreases up to the MC is lower than it and then increases when MC is higher than it.

AVC(1)=250/1=1 and so on

MC(n)=(TC(n)-TC(p))/(n-p)
MC(n)=marginal cost of n th unit
TC(n)=Total cost of n units of output
TC(p)=Total cost of p unit of output
here, n>p.
MC(1)=(350-250)/(1-0)=100

MC(2)=(430-350)/(2-1)=80 and so on

Output	Total cost	Variable cost	Average Total Cost	Average variable cost	Marginal Cost
tables/day
0	250	0
1	350	100	350	100	100
2	430	180	215	90	80
3	490	240	163.33	80	60
4	570	320	142.5	80	80
5	670	420	134	84	100
6	820	570	136.67	95	150