Question

1) Complete the following table of cost figures: Output TVC TC AVC ATC MC 3.0 : - . . 9.2 . . . . - . 2.38 . . 4.0 . . . 2.2 . 5.0 . . 23.9 . - 36.9 - - 2) Write all formula on how to calculate each of the column heading: TVC Labor x Wages TO ATCX Q AVC TFC + TVC TVC AVC + AFC ATC To MC Changes in TC Changes in Q

I need help with the table and the formula. Each variable must have 2 formulas

Answer 1

Output	TFC	TVC	TC	AVC	ATC	MC
0	3	0	3	0	0	--
1	3	3	6	3	6	3
2	3	5	8	2.5	4	2
3	3	6.2	9.2	2.06	3.06	1.2
4	3	8.4	11.4	2.1	2.85	2.2
5	3	11.9	14.9	2.38	2.98	3.5
6	3	16.9	19.9	2.81	3.31	5
7	3	23.9	26.9	3.41	3.84	7
8	3	33.9	36.9	4.23	4.61	10

The above table is solved in 12 steps in a sequence.

1) At 0 unit of output variable cost is always zero and

Total Cost = Fixed Cost + Variable Cost

3 = Fixed Cost + 0

Fixed Cost = 3

Also, fixed cost remains the same at every unit of output.

2) Total Cost at 1 unit will be

Total Cost = Fixed Cost + Variable Cost

Total Cost = 3 + 3

Total Cost = 6

3) Total variable cost and Total cost at 2 units will be

As at 2 units of output, average total cost is 4

Total Cost = Average total cost x output

Total Cost = 4 x 2

Total Cost = 8

Total Variable cost = Total cost - Total Fixed cost

Total Variable cost = 8 - 3

Total Variable cost = 5

4) Total Variable cost at 3 units of output

Total Variable cost = Total cost - Total Fixed cost

Total Variable cost = 9.2 - 3

Total Variable cost = 6.2

5) Total variable cost and Total cost at 4 units will be

At 4 units of output, marginal cost is 2.2

TCn = TCn-1 + MCn

TC4 = TC3 + MC4

TC4 = 9.2 + 2.2

TC4 = 11.4

Total Variable cost = Total cost - Total Fixed cost

Total Variable cost = 11.4 - 3

Total Variable cost = 8.4

6) Total variable cost and Total cost at 5 units will be

At 5 units, average variable cost is 2.38

Total variable Cost = Average variable cost x output

Total variable Cost = 2.38 x 5

Total variable Cost = 11.9

Total Cost = Fixed Cost + Variable Cost

Total Cost = 3 + 11.9

Total Cost = 14.9

7) Total variable cost and Total cost at 6 units will be

At 6 units of output, marginal cost is 5

TCn = TCn-1 + MCn

TC6 = TC5 + MC6

TC6 = 14.9 + 5

TC6 = 19.9

Total Variable cost = Total cost - Total Fixed cost

Total Variable cost = 19.9 - 3

Total Variable cost = 16.9

8) Total cost at 7 units will be

Total Cost = Fixed Cost + Variable Cost

Total Cost = 3 + 23.9

Total Cost = 26.9

9) Total Variable cost at 8 units will be

Total Variable cost = Total cost - Total Fixed cost

Total Variable cost = 36.9 - 3

Total Variable Cost = 33.9

10) Average Variable Cost

AVC = Total Variable Cost / Output

11) Average Total Cost

AVC = Total Cost / Ouptut

12) Marginal Cost

Marginal Cost refers to the change in total cost when additional units are produced

MCn = TCn - TCn-1

For example at 2 units of output

MC2 = TC2 - TC1

MC2 = 8 - 6

MC2 = 2

Similarly all are calculated like this

Formulas of

Total Variable Cost (TVC)

TVC = Total Cost - Total Fixed Cost

TVC = Average Variable Cost x Output

Total Cost (TC)

TC = Total Fixed Cost + Total Variable Cost

TC = Average Total Cost x Output

Average Variable Cost (AVC)

AVC = Average total cost - Average Fixed Cost

AVC = Total variable Cost / Output

Average Fixed Cost (ATC)

ATC = Average total cost - Average Variable Cost

ATC = Total Fixed Cost / Output

Marginal Cost (MC)

MC = Change in TC / Change in Q

MCn = TCn - TCn-1

MCn = TVCn - TVCn-1