Question

Use your knowledge of cost functions to calculate the missed cost data in the accompanying table.

Round your answers to two digits after the decimal.

Quantity	Marginal cost	Fixed cost	Variable cost	Total cost	Average fixed cost	Average variable cost	Average total cost
0	---				---	---	---
1						$50.00$50.00
2			$72.00$72.00
3	$105.00$105.00
4		$30.00$30.00		$380.00$380.00

What is the total cost when producing zero units?

total cost: $

What is the marginal cost for the first unit?

marginal cost: $

What is the average total cost when producing three units?

average total cost: $

What is the average variable cost when producing four units?

average variable cost: $

Answer 1

Quantity	Fixed Cost	Variable Cost	Total Cost	Marginal Cost	Average Fixed Cost	Average Variable Cost	Average Total Cost
0					--	--	--
1						50
2		72
3				105
4	30		380

All the missing values are calculated in a sequence of 10 steps

1) As at the 4th unit, fixed cost is given 30 and fixed cost remains the same at every unit hence fixed cost at every unit will remain $30.

2) At 2 units fixed cost is 30 and the variable cost is 72 and the total cost is fixed cost plus variable cost. So the total cost at 2nd unit will 102 (30 + 72).

3) At 3rd unit, the marginal cost is given 105 so to calculate total cost at 3 units following formula will be used.

MCn = TCn - TCn-1

MC3 = TC3 - TC2

105 = TC3 - 102

TC3 = 207

4) Variable cost at 3 units will be total cost minus fixed cost. So variable cost will be 177 (207 - 30)

5) Variable cost at 4 units will be total cost minus fixed cost. So variable cost will be 350 (380 - 30)

6) Variable cost at 1 unit will be average variable cost multiplied by quantity. So variable cost will be 50 (50 x 1)

7) At 1 unit fixed cost is 30 and the variable cost is 50 and the total cost is fixed cost plus variable cost. So the total cost at 1 unit will 80 (30 + 50).

8) At 0 units, variable cost is always zero hence the total cost will be 30 (30 + 0).

9) Marginal Cost is the change in total cost when additional units are produced

MCn = TCn - TCn-1

At 1 unit

MC1 = 80 - 30

MC1 = 50

At 2 units

MC2 = 102 - 80

MC2 = 22

At 4 units

MC4 = 380 - 207

MC4 = 173

10) Average Fixed Cost = Fixed Cost / Quantity

Average Variable Cost = Variable Cost / Quantity

Average Total Cost = Total Cost / Quantity

Quantity	Fixed Cost	Variable Cost	Total Cost	Marginal Cost	Average Fixed Cost	Average Variable Cost	Average Total Cost
0	30	0	30	--	--	--	--
1	30	50	80	50	30	50	80
2	30	72	102	22	15	36	51
3	30	177	207	105	10	59	69
4	30	350	380	173	7.5	87.5	95

1. The total cost of producing zero units is $30
2. The marginal cost for the first unit is $50
3. The average total cost of producing three units is $69
4. The average variable cost of producing four units is $87.5