Question

7. Various measures of cost Douglas Fur is a small manufacturer of fake fur boots in Chicago. The following table shows the company's total cost of production at various production quantities. Fill in the remaining cells of the table. Quantity (Pairs) Total Cost (Dollars) Marginal Cost (Dollars) Fixed Cost (Dollars) Variable Cost (Dollars) Average Variable Cost (Dollars per pair) Average Total Cost (Dollars per pair)

Answer 1

We have completed the table using the given formulas:

Marginal cost_n= Total cost_n - Total cost_n-1, Variable cost = Total cost - fixed cost, Average variable cost = Variable cost/Quantity , Average total cost = Total cost/Quantity.

Fixed cost = 60 (at each quantity including quantity zero where variable cost is zero)

I variable Average Average Tvariable total I cost cast Quantity co 450 CS Scanned with CamScanner

In the diagram below, we have plotted quantity of output on the x-axis and costs on the y-axis. Then, from the table given above, we have plotted each points to draw AVC,ATC and MC curves as follows:

cost (ATC, AVC, MC) MC ATC - AVC ० 2 । . 3 4 5 Quantity of output Scanned with CamScanner