Question

5. Draw a set of coordinate axes on a piece of graph paper. Label the x axis“Output” (0 to 20 units) and the y axis “Cost” (0 to 20 units). Plot the following (x, y) points on your graph: (0, 4); (2, 6); (4, 7); (7, 8); (9, 9); (11, 11); (13, 14). Connect these points with a smooth curve and label it “Total Cost.” Working from this curve, construct a total fixed cost curve and total variable cost curve for the same firm.

6. Draw a second set of coordinate axes on another piece of graph paper. Label the horizontal axis “Output” (0 to 20 units) and the vertical axis “Cost per Unit” (0 to 2 units, in tenths of a unit). Using as a basis the total cost, total variable cost, and total fixed cost curves you drew for Problem 5, construct the following curves on your new graph: marginal cost, average total cost, average variable cost, and average fixed cost.

Answer 1

Q	C	TFC	TVC	ATC	AVC	AFC	MC
0	4	4	0
2	6	4	2	3.00	1.00	2.00	1.00
4	7	4	3	1.75	0.75	1.00	0.50
7	8	4	4	1.14	0.57	0.57	0.33
9	9	4	5	1.00	0.56	0.44	0.50
11	11	4	7	1.00	0.64	0.36	1.00
13	14	4	10	1.08	0.77	0.31	1.50

TFC = TC (when Q = 0)

TVC = C - TFC

ATC = C/Q , AFC = TFC/Q and AVC = TVC/Q

MC (nth unit) = (C (Qn) - C (Qn-1))/(Qn - Qn-1)