Question

Units of Output (Q)	Total Cost ($)	Total Variable Cost (TVC)	Total Fixed Cost (TFC)	Average Total Cost (ATC)	Average Fixed Cost (AFC)	Average Variable Cost (AVC)	Marginal Cost (MC)
0	50
1	70
2	85
3	110
4	150
5	195
6	240
7	287
8	334

1. Calculate Total Variable Cost and show the formula as well as working
2. Calculate Total Fixed Cost and show the formula as well as working
3. Calculate Average Fixed Cost and show the formula as well as working
4. Calculate Average Variable Cost and show the formula as well as working
5. Calculate Average Total Cost and show the formula as well as working
6. Calculate Marginal Cost and show the formula as well as working

Answer 1

Fixed Cost is the Cost incurred at zero level of output. Here Fixed Cost is 50

a.Total Variable Cost = Total cost - Total Fixed cost

b. Total Fixed Cost = Cost at Zero level of output = 50 for all levels of output

c. Average Fixed Cost = Total Fixed Cost/Unit of Output

d. Average Variable Cost = Total Variable Cost/Unit of Output

e.Average Total Cost = Total Cost/Unit of Output OR Average Fixed Cost+Average Variable Cost

f.Marginal Cost = Total cost at X level of output - Total Cost at (X-1) level of output

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