Question

1. Consider the following hypothetical example Output Price P Total Fixed Cost TFC Total Cost TC Total Variable Cost TVC Average Total Cost ATC Marginal Cost MC 0 100 100 90 1 2 130 158 80 3 183 70 60 4 5 6 7 50 40 30 208 253 308 368 8 20 468 A. Complete the missing figures B. Plot ATC C. Plot AVC D. Plot MC

Answer 1

Output	Price (P)	Total Fixed Cost (TFC)	Total Variable Cost (TVC)	Total Cost (TC)	Average Total Cost (ATC)	Marginal Cost (MC)
0	100	100	0	100
1	90	100	30	130	130	30
2	80	100	58	158	79	28
3	70	100	83	183	61	25
4	60	100	108	208	52	25
5	50	100	153	253	50.6	45
6	40	100	208	308	51.33	55
7	30	100	268	368	52.57	60
8	20	100	368	468	58.5	100

Formulae Used:

1. Total Cost = Total Variable Cost + Total Fixed Cost

2. Average Total Cost = Total Cost/Output

3. Marginal Cost = change in total cost/change in output

Average Total Cost (ATC) 140 120 100 80 60 Average Total Cost (ATC) 10 20 0 1 2 3 4 5 6 7 8 9

Average Variable cost 50 45 40 35 30 25 20 Average Variable cost 15 10 5 0 1 2 3 4 5 6 7 00 9