Question

Marginal Fixed Quantity cost cost cost 0 --- Variable cost Total Average fixed Average variable Average total cost cost cost cost $40.00 $72.00 $105.00 $40.00 $380.00 What is the total cost when producing zero units? total cost: $ What is the marginal cost for the first unit? marginal cost: $ What is the average total cost when producing three units? average total cost: $ What is the average variable cost when producing four units? average variable cost: $ average variable cost: SC

Answer 1

Q	MC	FC	VC	TC	AFC	AVC	ATC
0		40	0	40
1	40	40	40	80	40.0	40	80.0
2	32	40	72	112	20.0	36	56.0
3	105	40	177	217	13.3	59	72.3
4	163	40	340	380	10.0	85	95.0

The formulas used:

At Q = 0, TC=FC and VC=0, MC = (TCn-TCn-1)/(Qn-Qn-1)

TCn = MCn + TCn-1, ATC = TCQ, TC=FC+VC, AVC = VC/Q

• TC at Q= 0, TC=40
• MC at Q=1, MC = 40
• ATC at Q=3 units, ATC = 72.3
• AVC at Q=4 units, AVC = 85