Question

Chapter 13 Worksheet

EC102

Short Run Cost

1. Define the following

a. total fixed costs

b. total variable costs

2. Write a formula for each of the following

a. total costs

b. average fixed costs

c. average variable costs

d. average total costs

e. marginal costs

3. Fill in the blanks in the following table.

Output	TFC	TVC	TC	MC	AFC	AVC	ATC
1	100	50
2				30
3						40
4			270
5							70

  

Answer 1

Ans

1)

a) Total fixed cost :- it's a type of Cost that fixed at all production and output level. Ex :- table below

b) Total variable cost:- it's type of cost that chage at production level of output. Its change at all production level due to change in output. Ex :- table below

2) Formulas

a) Total cost (TC) = Total fixed cost (TFC) + Total variable cost (TVC)

b) Average fixed cost (AFC) = TFC/ level of output

c) Average variable cost (AVC) = TVC / level of output

d) Average total cost (ATC) = TC / level of output

e) Marginal cost = ∆ Change in Total cost / ∆ Change in output

3)

Output	TFC	TVC	TC = (TFC + TVC)	MC= (∆TC/∆output)	AFC = ( TFC/output)	AVC = (TVC/output)	ATC = ( TC/output)
1	100	50	150	-	100	50	150
2	100	80	180	30	50	40	90
3	100	120	220	40	33.33	40	77.33
4	100	70	270	50	25	17.5	42.5
5	100	250	350	80	20	50	70

We know TFC is fixed at all production level of output 100.

Change in output is 1 at all level