(Table 7.1) Which of the following is correct at 4 units of output? Output Quantity Q...

(Table 7.1) Which of the following is correct at 4 units of output?

Output Quantity Q	Fixed Costs FC	Variable Costs VC	Total Cost TC	Average Fixed Cost AFC	Average Variable Cost AVC	Average Total Cost ATC
0	70	0
1	70	40
2	70	70
3	70	120
4	70	210
5	70	330

	AFC = 0.06; AVC = 0.02; ATC = 0.08
	AFC = 70; AVC = 21; ATC = 91
	AFC = 17.50; AVC = 52.50; ATC = 70
	AFC = 280; AVC = 840; ATC = 1,320

please explain how you arrived at your final answer, thank you!

Expert Solution

Using the formulas above the table is completed as below

Q	FC	VC	TC	AFC	AVC	ATC
0	70	0	70
1	70	40	110	70	40	110
2	70	70	140	35	35	70
3	70	120	190	23.33333	40	63.33333
4	70	210	280	17.5	52.5	70
5	70	330	400	14	66	80

From the table it is evident that at Q=4 , AFC = 17.50; AVC = 52.50; ATC = 70. Therefpre, the correct option is

AFC = 17.50; AVC = 52.50; ATC = 70

Rahul Sunny answered 2 years ago

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