Question

Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month. 

Answer the following questions: 

A) What is the marginal cost of creating the tenth instructional module in a given month? 

B) What is the average variable cost for the month if six instructional modules are produced? 

C) What is the average fixed cost for the month if nine instructional modules are produced? 

D) How many instructional modules are produced when the marginal cost is $1300? 

E) One month, Teacher's Helper produced 18 instructional modules. What was the average fixed cost for that month?

Answer 1

Q	FC	VC	TC=FC+VC= ATC(Q)	AFC=FC/Q	AVC=VC/Q	ATC=TC/Q	MC=Change in TC
0	(600+480)=1080	0	1080	-	-	-	-
1	1080	400	(1080+400)=1480	1080	400	1480	(1480-1080)=400
2	1080	850	(965)(2)=1930	540	425	965	(1930-1480)= 450
3	1080	1350	2430	360	450	810	(2430-1930)=500
4	1080	1900	(1080+1900)=2980	270	475	745	(2980-2430)=550
5	1080	2500	(1080+2500)=3580	216	500	716	(3580-2980)=600
6	1080	(4280-1080)=3200	4280	180	533.33	713.3	700
7	1080	4100	(1080+4100)=5180	154.3	585.7	740	(5180-4280)=900
8	1080	5400	(1080+5400)=6480	135	675	810	(6480-5180)=1300
9	1080	7300	(1080+7300)=8380	120	811.1	922.2	(8380-6480)=1900
10	1080	(10880-1080)=9800	10880	108	980	1088	(10880-8380)=2500

(a) Marginal cost of creating the 10th instructional module = $2500.

(b) Average variable cost if six instructional modules are produced = $533.33.

(c) Average fixed cost if nine instructional modules are produced = 1080/9 = $120.

(d) When marginal cost = $1300 , then we can see from the above table that 8 instructional modules are produced.

(e) If 18 instructional modules are produced , then average fixed cost = 1080/18= $60.

Answer 2