In: Economics
Output (units per day) | Total fixed cost (dollars) | Total variable cost (dollars) | Total cost (dollars) |
0 | 20 | 0 | 20 |
4 | 20 | 25 | 45 |
9 | 20 | 50 | 70 |
13 | 20 | 75 | 95 |
16 | 20 | 100 | 120 |
18 | 20 | 125 | 125 |
a) From the above table, what is the average total cost of producing 13 units? Show your steps.
b) From the above table, calculate the average total variable cost of producing 9 units of output. Show your steps.
c) Using the data in the above table, when output increases from 9 to 13 units, Calculate the marginal cost of one of those 4 units. Show your steps
a) Average total cost = Total Cost / Output
Total cost of producing 13 units = 95
Average total cost = 95 / 13 = 7.3
b) Average total variable cost = Total Variable Cost / Output
Total variable cost of producing 9 units = 50
Average total variable cost = 50 / 9 = 5.55
c) When output rises from 9 to 13, total cost rises from 70 to 95 where marginal cost is 95 - 70 = 25