Question

In: Economics

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

From the following information on costs of production of the ABC corporation, calculate a) Total Fixed Cost (TFC), Total Varibale Cost (TVC), Average Fixed Cost (AFC), Average Variable Cost (AVC), Average Total Cost (ATC), and Marginal Cost (MC).

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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