Question

Give the formulas for and plot (in excel) AFC, MC, AVC, and AC if the cost function is

TC=10+10q,

TC=10+q2, or

TC=10+10q−4q2+q3.

STEP BY STEP IN EXCEL

Answer 1

Working notes:

(i) AFC = TFC / q

(ii) MC = dTC/dq = Change in TC / Change in q

(iii) AVC = TVC / q

(iv) AC = TC / q

Therefore:

(1) TC = 10 + 10q

Data table:

q	TC	FC	TVC	AFC	MC	AVC	AC
0	10	10	0
1	20	10	10	10	10	10	20
2	30	10	20	5	10	10	15
3	40	10	30	3.33	10	10	13.33
4	50	10	40	2.5	10	10	12.5
5	60	10	50	2	10	10	12
6	70	10	60	1.67	10	10	11.67
7	80	10	70	1.43	10	10	11.43
8	90	10	80	1.25	10	10	11.25
9	100	10	90	1.11	10	10	11.11
10	110	10	100	1	10	10	11

Graph:

(2) TC = 10 + q²

Data table:

q	TC	FC	TVC	AFC	MC	AVC	AC
0	10	10	0
1	11	10	1	10	2	1	11
2	14	10	4	5	4	2	7
3	19	10	9	3.33	6	3	6.33
4	26	10	16	2.5	8	4	6.5
5	35	10	25	2	10	5	7
6	46	10	36	1.67	12	6	7.67
7	59	10	49	1.43	14	7	8.43
8	74	10	64	1.25	16	8	9.25
9	91	10	81	1.11	18	9	10.11
10	110	10	100	1	20	10	11

Graph:

(3) TC = 10 + 10q - 4q² + q³

Data table:

q	TC	FC	TVC	AFC	MC	AVC	AC
0	10	10	0
1	17	10	7	10	5	7	17
2	22	10	12	5	6	6	11
3	31	10	21	3.33	13	7	10.33
4	50	10	40	2.5	26	10	12.5
5	85	10	75	2	45	15	17
6	142	10	132	1.67	70	22	23.67
7	227	10	217	1.43	101	31	32.43
8	346	10	336	1.25	138	42	43.25
9	505	10	495	1.11	181	55	56.11
10	710	10	700	1	230	70	71

Graph: