Question

COST OF PRODUCTION ASSIGNMENT

                                Total                      Total                                                      Average                 Average                 Average

Total                      Fixed                      Variable                 Total                      Fixed                      Variable                 Total                      Marginal

Product                  Cost                        Cost                        Cost                        Cost                        Cost                        Cost                        Cost

(Q)                          (TFC)                     (TVC)                     (TFC+TVC)          (TFC/Q)                 TVC/Q)                  (TC/Q)                   (DTC)

0                              $________           $0                           $________           $________           $________           $________                $________

1                              $________           $85                         $________           $________           $________           $________                $________

2                              $________           $125                       $________           $________           $________           $________                $________

3                              $________           $150                       $________           $________           $________           $________                $________

4                              $________           $240                       $________           $________           $________           $________                $________

5                              $________           $350                       $________           $________           $________           $________                $________          

6                              $________           $550                       $________           $________           $________           $________                $________

7                              $________           $760                       $________           $________           $________           $________                $________

1.A firm has fixed costs of $120 and variable costs as indicated on the table above. Complete the table.

2.Graph the Fixed Costs, Variable Costs, and Total Costs.

3.Graph the AFC, AVC, ATC, and MC.

4.How would each curve differ if Fixed Costs were $200 rather than $120.

Answer 1

Answer 1

Here we first develop the graph by the given information.

Q	TFC	TVC	TC	AFC	AVC	MC	ATC
0	120	0	120	0	0	0	0
1	120	85	205	120	85	85	205
2	120	125	245	60	62.5	40	122.5
3	120	150	270	40	50	25	90
4	120	240	360	30	60	90	90
5	120	350	470	24	70	110	94
6	120	550	670	20	91.66	200	111
7	120	760	880	17	108.5	210	125

Answer-2

Based on the table above we can draw Fixed costs, Variable cost and Total costs curves. That is,

Answer-3

Based on the table above we develop AFC, AVC,ATC, and MC curves. That is,

Answer-4

If the fixed cost is $200 rather than $120, then AVC and ATC curve would be higher- by an amount equal to $80. The MC costs curve less than the above diagram. AVC and ATC curve is also lower.