Question

.) The cost structure of a manufacturer of microships is described in the table shown below.

The firm's fixed costs equal $15,000 per day. Calculate the average variable cost, average fixed cost, and average total cost at each output level. (Your answer should be rounded to the nearest cent.)

Output (microchips per day)	Total Cost of Output	Average Variable Cost ($)	Average Fixed Cost ($)	Average Total Cost ($)
0	$15,000	-	-	-
20,000	65,000
45,000	100,000
70,000	155,000
95,000	225,000
120,000	330,000
145,000	470,000

Answer 1

OUTPUT TOTAL COST AVC AFC ATC 15,000 65,000 100,000 155,000 225,000 330,000 470,000 2.5 1.88 20,000 45,000 70,000 95,000 120,000 145,000 0.75 0.33 0.21 0.15 0.125 0.103 3.25 2.22 2.21 2.36 2.T5 3.24 50000 85000 140000 210000 315,000 455,000 2.21 2.62 3.13

The average total cost is found by dividing the total cost by the output produced, the average fixed cost also found out by the same manner. It is calculated by dividing the total fixed cost by the output produced. The last one is the average variable cost, it is calculated by dividing the total variable cost by the output produced but here the total variable cost is not directly given and the total variable cost is calculated by deducting the total fixed cost from the total cost.

$AVC=TVC/Q$

$TVC=TC-TFC$

$ATC=TC/Q$

$AFC=TFC/Q$