As per the information provided in the question, the following output is derived from the given table in question | |||||||||
the Capital (K) is a fixed input it's quantity is = 1 unit | |||||||||
price of one unit of capital = $100 | |||||||||
Price of unit of labour or wage is =$25 | |||||||||
Capital, K | Labour, L | Total
Product or Q |
Total
Fixed cost (TFC) in $ |
Total
Variable Cost (TVC) in $ = Labour x Wage ($25) |
Total
cost (TC) in $ = TFC + TVC |
Average Fixed cost (AFC) in $ = TFC / Q | Average variable cost (AVC) in $ = TVC / Q | Average total cost (ATC) in $ =AFC + AVC | Marginal
cost (MC) in $ = change in total cost (TC )/ change in output (Q) |
1 | 0 | 0 | 100 | 0 | 100 | - | - | - | - |
1 | 1 | 20 | 100 | 25 | 125 | 5.00 | 1.25 | 6.25 | 1.25 |
1 | 2 | 50 | 100 | 50 | 150 | 2.00 | 1.00 | 3.00 | 0.83 |
1 | 3 | 87 | 100 | 75 | 175 | 1.15 | 0.86 | 2.01 | 0.68 |
1 | 4 | 100 | 100 | 100 | 200 | 1.00 | 1.00 | 2.00 | 1.92 |
1 | 5 | 112 | 100 | 125 | 225 | 0.89 | 1.12 | 2.01 | 2.08 |
1 | 6 | 122 | 100 | 150 | 250 | 0.82 | 1.23 | 2.05 | 2.50 |
1 | 7 | 132 | 100 | 175 | 275 | 0.76 | 1.33 | 2.09 | 2.50 |
1 | 8 | 141 | 100 | 200 | 300 | 0.71 | 1.42 | 2.13 | 2.78 |
1 | 9 | 150 | 100 | 225 | 325 | 0.67 | 1.50 | 2.17 | 2.78 |
1 | 10 | 158 | 100 | 250 | 350 | 0.63 | 1.58 | 2.21 | 3.13 |
Total Fixed cost is independent of output or product so it remains constant as $100 | |||||||||
Labour is the variable factor and it is dependent on output, it means more product can be produced with more labour | |||||||||
At zero unit of product TVC will be zero because units of labour is zero |
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