From the following information on costs of production of the ABC corporation, calculate

Quantity Produced	Total Cost	Total Fixed Cost (TFC)	Total Variable Cost (TVC)	Average Fixed Cost (AFC)	Average Variable Cost (AVC)	Average Total Cost (ATC)	Marginal Cost (MC)
0	$120	$120	-	-	-	-
1	135					$135
2	149					74.5
3	162					54
4	174					43.5
5	188					37.6
6	204					34
7	224					32
8	247					30.9
9	275					30.5

Graph the average fixed cost (AFC), average variable cost (AVC), average total cost ATC), and the marginal cost (MC) curves on one graph and TFC curve, TVC cost curve, and TC curve on another graph.

Solutions

Expert Solution

Q	TC	TFC	TVC	AFC	AVC	ATC	MC
0	120	120	0
1	135	120	15	120.00	15.00	135.00	15
2	149	120	29	60.00	14.50	74.50	14
3	162	120	42	40.00	14.00	54.00	13
4	174	120	54	30.00	13.50	43.50	12
5	188	120	68	24.00	13.60	37.60	14
6	204	120	84	20.00	14.00	34.00	16
7	224	120	104	17.14	14.86	32.00	20
8	247	120	127	15.00	15.88	30.88	23
9	275	120	155	13.33	17.22	30.56	28

Use the following relations:

TVC + TFC = TC

TFC remains the same = $ 120

AVC = TVC/Q , AFC = TFC/Q

ATC = AVC + AFC

MC (nth unit) = TC (n units) - TC ((n-1) units)

Rahul Sunny answered 2 years ago

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