Question

Use your knowledge of cost functions to calculate the missed cost data in the accompanying table. Round your answers to two digits after the decimal. Fixed cost Variable cost Total Average fixed Average variable Average total cost cost I cost cost --- --- ... Marginal Quantity cost 0 1 2 3 $85.00 $45.00 | $64.00 $50.00 $380.00

Answer 1

Quantity Marginal cost($) Fixed cost($) Variable cost($) Total cost($) Average fixed cost($) Average variable cost($) Average total cost($) 45 199 32 49.66666667 82.5 16.66666667 12.5 66.33333333 380

EXPLANATIONS • At Q = 0, fixed cost = 50, as fixed cost is the same across the quantities, and variable cost = 0 as Q = 0, so, total cost = 0. Here, marginal cost, average fixed cost, average variable cost and average total cost is undefined as Q = 0. At Q = 1, fixed cost = 50 and average variable cost = 45, so, the variable cost = 45 * Q = 45 * 1 = 45, so total cost = 50 +45 = 95, so, average fixed cost = 50/1 = 50 and average total cost = 95/1 = 95 and marginal cost = (45-0)/(2-1) = 45. • At Q = 2, fixed cost = 50, variable cost = 64, total cost = 50 + 64 = 114, average fixed cost = 50 / 2 = 25, average variable cost = 64/2 = 32 and average total cost = 114 /2 = 57 and marginal cost = (64 - 45)/(2-1) = 19. At Q = 3, fixed cost = 50, marginal cost = 85, so variable cost = 64 + 85 = 149 as change in Q = 1 and change in cost = 85, total cost = 50+ 149 = 199, average fixed cost = 50/3 = 16.67, average variable cost = 149 / 3 = 49.67, average total cost = 199 /3 = 66.33. • At Q = 4, fixed cost = 50, total cost = 380, so variable cost = 380 -50 = 330, average fixed cost = 50 / 4 = 12.5, average variable cost = 330 / 4 = 82.5 and average total cost = 380 / 4 = 95 and marginal cost = (330 - 149)/ (4-3) = 181.

ANSWERS 1. At Q = 0, total cost = 50 = fixed cost 2- Marginal cost for the first unit = 45 3- Average total cost when Q = 3 is 66.33(approx) 4- Average variable cost when Q = 4 is 82.5 Hope, the answers and explanations are clear to you, my friend!!!

Note: At Q = 3, the average fixed cost will be 16.67, the average variable cost will be 49.67 and the average total cost will be 66.33 for rounding the answer to two digits after the decimal.