Question

Webby inc. is a web development company. Webby's monthly production function for developing websites is given in the table below. Webby pays $5,000 a month in rent for office space and equipment. It pays each programmer $3,000 a month. There are no other production costs. Fill in the table of production costs.

Programmers Websites Variable cost Total cost Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost - 14

Answer 1

Programmers	Websites	Variable cost	Fixed cost	Total Cost	Average Fixed cost	Average Variable Cost	Average Total Cost	Marginal Cost
0	0	0	5000	5000	-----	------	-----	-----
1	2	3000	5000	8000	2500	1500	4000	1500
2	6	6000	5000	11000	833.33	1000	1833.33	750
3	14	9000	5000	14000	357.14	642.86	1000	375
4	20	12000	5000	17000	250	600	850	500
5	24	15000	5000	20000	208.33	625	833.33	750
6	26	18000	5000	23000	192.31	692.31	884.62	1500

Fixed cost = $5000.

Fixed cost remains constant at each level of output.

Variable cost = $3000 * (number of programmers)

Total Cost = Fixed Cost + Variable Cost

Average fixed cost = (Fixed cost / quantity)

Average variable cost = (Variable cost / Quantity)

Average total cost = (Total cost / quantity)

Marginal cost = (Change in total cost / change in quantity)