Question

Answer questions using the table
                                              TABLE

                     Fixed         Variable        Total                                    Marginal

Output          Cost              Cost           Cost         AVC     ATC         Cost

1                                       $400

2                                       $700

3                                       $918

4                                       $1200

5                                       $1650

6                                       $2352

Given: Fixed cost =$1000; price=$550. Fill in table

On a piece of graph paper, draw a graph of the demand, marginal revenue, ATC, AVC, and MC curves. The demand curve would be perfectly elastic and it would be the same as the Marginal Revenue Curve and equal to the price.

How much is the best level of output?

Find total Profit.

State the minimum point of the ATC curve in dollars and cents.

State the minimum point of the AVC curve in dollars and cents.

Answer 1

output	Fixed cost	Variable cost	Total cost	AVC	ATC	Marginal cost
1	1000	400	1400	400	1400
2	1000	700	1700	350	850	300
3	1000	918	1918	306	639.3333	218
4	1000	1200	2200	300	550	282
5	1000	1650	2650	330	530	450
6	1000	2352	3352	392	558.6667	702

Price V/S Output 1600 1400 ATC Price (cost) MC -MR = Price AVC 5 Output

Best level of output = 5 ( because, after this level of output, MC will be greater than the MR)

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Total profit = total revenue - total cost = 5*550 - 2650

Total profit = $100

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Minimum point of the ATC curve = $530.00

Minimum point of the AVC curve = $300.00