Question

Use your knowledge of cost functions to calculate the missed cost data in the accompanying table.

Round your answers to two digits after the decimal.

Quantity	Marginal cost	Fixed cost	Variable cost	Total cost	Average fixed cost	Average variable cost	Average total cost
0	---				---	---	---
1						$45.00

2			$72.00

3	$95.00

4		$20.00

$360.00

What is the total cost when producing zero units?

total cost: $

What is the marginal cost for the first unit?

marginal cost: $

What is the average total cost when producing three units?

average total cost: $

What is the average variable cost when producing four units?

average variable cost: $

Answer 1

Solution:-

Quantity	Marginal cost	Fixed cost	Variable cost	Total cost	Average fixed cost	Average variable cost	Average total cost
0	-	$20.00	-	$20.00	0	-	0
1	$45.00	$20.00	$45.00	$65.00	20	$45.00	$65.00
2	$27.00	$20.00	$72.00	$92.00	10	$36.00	$46.00
3	$95.00	$20.00	$167.00	$187.00	6.67	$55.67	$62.33
4	$193.00	$20.00	$340.00	$360.00	5	$85.00	$120.00

(a). The total cost when producing zero units = $20.00

(b). The marginal cost for the first unit = $45.00

(c). The average total cost when producing three units = $62.33

(d). The average variable cost when producing four units = $85.00

Notes :-

• Fixed cost is incured at all units even if nothing is produced.
• Marginal cost = Total cost(n) - Total Cost(n - 1)
• Average Fixed cost = Fixed cost / Number of units
• Average Variable cost = Variable cost / Number of units
• Average Total cost = Total cost / Number of units
• Total Cost = Fixed cost + Variable cost