Question

In: Economics

A French Winery, Cave des Vignerons de Rasteau is a fine winery. The firm’s fixed costs...

A French Winery, Cave des Vignerons de Rasteau is a fine winery. The firm’s fixed costs for 0 units of output and its average total cost of producing different output levels are summarized in the table below. Complete the table to find the fixed cost, variable cost, total cost, average fixed cost, average variable cost, and marginal cost at all relevant levels of output.

Q

FC

VC

TC

AFC

AVC

ATC

MC

0

$10,000

---

$10,000

---

---

---

---

10

20,000

20

25,000

30

40,000

40

60,000

50

100,000

Solutions

Expert Solution

Answer:

Q

FC ($)

VC ($)

TC ($)

AFC ($)

AVC ($)

ATC ($)

MC ($)

0

10000

---

10000

---

---

---

---

10

10000

10000

20000

1000

1000

2000

10000

20

10000

15000

25000

500

750

1250

5000

30

10000

30000

40000

333.33

1000

1333.33

15000

40

10000

50000

60000

250

1250

1500

20000

50

10000

90000

100000

200

1800

2000

40000

Calculations:

Q

FC ($)

VC ($)

TC ($)

AFC ($)

AVC ($)

ATC ($)

MC ($)

0

10000

---

10000

---

---

---

---

10

10000

20000-10000=10000

20000

10000/10=1000

10000/10=1000

1000+1000=2000

20000-10000=10000

20

10000

25000-10000=15000

25000

10000/20=500

15000/20=750

500+750=1250

25000-20000=5000

30

10000

40000-10000=30000

40000

10000/30=333.33

30000/30=1000

333.33+1000=1333.33

40000-25000=15000

40

10000

60000-10000=50000

60000

10000/40=250

50000/40=1250

250+1250=1500

60000-40000=20000

50

10000

100000-10000=90000

100000

10000/50=200

90000/50=1800

200+1800=2000

100000-60000=40000

Formulas used:

  1. Variable cost = Total cost – Fixed cost
  2. AFC = Fixed cost / Quantity
  3. AVC = Variable cost / Quantity
  4. ATC = AFC + AVC (or) ATC = TC/Q
  5. MC = TCn – TCn-1

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