Question

You have collected the following data on output and total variable costs Q TVC ($) 10 72,800 20 124,400 30 159,600 40 183,200 50 200,000 60 214,800 70 232,400 80 257,600 90 295,200 100 350,000

Answer 1

Q	TVC	AVC	TC	AC	MC
10	72800	7280	280300	28030
20	124400	6220	331900	16595	5160
30	159600	5320	367100	12236.67	3520
40	183200	4580	390700	9767.5	2360
50	200000	4000	407500	8150	1680
60	214800	3580	422300	7038.333	1480
70	232400	3320	439900	6284.286	1760
80	257600	3220	465100	5813.75	2520
90	295200	3280	502700	5585.556	3760
100	350000	3500	557500	5575	5480

AVC 9000 7000 6000 5000 100) -AVC 3000 2000 1000 0 0 20 40 60 80 100 120 Output a) The Horace the Avc of the figure above firm calculated as : TVC TVG AVC with falling with rising The increasing retwen 'n associated AVC and decreasing retwen is associaled AVC The AVC curve falls until Q = 80 and then starts to nise. Then range of increasing retwen: output to so of decreasing retwen: output 80 to t 100 b) Thro cwees aree given below! 600000 30000 500000 25000 400000 20000 500000 15000 AC,AVCMC CTY AVC TVC НАС TC 200000 10000 MC 100000 5000 0 0 20 0 40 50 80 80 0 100 20 120 40 100 120 60 Output Output

() The fized wimp sum tax is part of fixed cost. This will increase fixed cost and will increase TC not affecting TVC. This oney and AC will shift up AVC and Me will remain same. d) $650 per unit dax will increase variable cost as this will affect the per uned cost. This will also increase TC. AS both AVC and TC will nise, each of MC, AVC and AC will mise as well. e) MR = MC As each firm maximiges profit MC. is the supply function of the firm. that affects MC will change output decision of the firm. per unit tax will change firm's output decision. Any cost change the Then the