Question

Quantity Total Cost Q Variable Marginal Cost Marginal Cost Cost MC MC VC (calculated (calculated using TC) using VC) TC O doz
3 420 120 4 450 150 5 490 190 6 540 240 What is the pizzerias fixed cost? Note: Recall that TC = FC + VC $200 $300 $400 cann
Construct a table in which you calculate the marginal cost per dozen pizzas using the information on total cost. Note: Recall
Note: Recall that marginal cost can also be calculated as MC = AVC AQ Note: As the table indicates, the first column is the q
What is the relationship between these sets of numbers? Explain. Marginal cost is the same whether it is calculated from tota
0 0
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Answer #1
Q TC VC MC =(Change in TC) MC=(Change in VC)
0 300 0 - -
1 350 50 50 50
2 390 90 40 40
3 420 120 30 30
4 450 150 30 30
5 490 190 40 40
6 540 240 50 50

Pizzeri's fixed cost = TC-VC = $(300-0)= $300.

Hence, option(B) is correct.

Marginal cost is the same whether it is calculated from total cost or variable cost. The reason is that the change in cost of production is captured by variable cost.The reason is that the change in cost of production is captured by variable cost not by fixed cost which does not change when output changes. Hence, option(A) is correct.

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