Question

Given the following total cost schedule of a firm, derive the total fixed cost and total variable cost schedules of the firm, and from them derive the average fixed cost, average variable cost, average total cost, and marginal cost schedules of the firm.

Q1. Answer question above using the table below:

Quantity TC($) TFC TVC AFC AVC   ATC MC

0
1
2
3
4
5

  

Q 0 1 2 3 4 5

TC $30 50 60 81 118 180

Answer 1

Ans:

Quantity	TC ($)	TFC	TVC	AFC	AVC	ATC	MC
0	30	30	0	0	0	0	0
1	50	30	20	30	20	50	50
2	60	30	30	15	15	30	10
3	81	30	51	10	17	27	21
4	118	30	88	7.5	22	29.5	37
5	180	30	150	6	30	36	62

Explanation:

TC = TFC + TVC

TVC = TC - TFC

AFC = TFC / Q

AVC = TVC / Q

ATC = TC / Q

MC =

TFC is the cost which is fixed in nature at all level of output. It is cleared from the table , TFC is $30 at zero level of output. At zero level of output TVC is zero , so the TC is equal to TFC which is equal to $30.