Question

How do I calculate AVC (Average Variable Cost)? TABLE FOR COMPUTATION OF PROBLEM 23-4 Total Output...

How do I calculate AVC (Average Variable Cost)?

TABLE FOR COMPUTATION OF PROBLEM 23-4

Total Output and Sales

Total Costs

Market Price

Total Revenues

Total Profit

Average Total Cost (ATC)

Average Variable Cost (AVC)

Marginal Cost (MC)

Marginal Revenue (MR)

0

5

10

0

-5

0

0

--

--

1

9

10

10

1

9

4

4

10

2

11

10

20

9

5.5

3

2

10

3

12

10

30

18

4

1

10

4

14

10

40

26

3.5

2

10

5

18

10

50

32

3.6

4

10

6

24

10

60

36

4

6

10

7

32

10

70

38

4.57

8

10

8

42

10

80

38

5.25

10

10

9

54

10

90

36

6

12

10

10

68

10

100

30

6.8

14

10

Homework Answers

Answer #1

Variable costs are 0 when output is 0
at this point TC=FC
So we know fixed costs are 5
Deduct 5 from TC at each output level to get VC
Now AVC=VC/Output

Total Output and Sales Total Costs Market Price Total Revenues Total Profit VC=TC-5 Average Total Cost (ATC) Average Variable Cost (AVC) Marginal Cost (MC) Marginal Revenue (MR)
0 5 10 0 -5 0 0 -- -- --
1 9 10 10 1 4 9 4 4 10
2 11 10 20 9 6 5.5 3 2 10
3 12 10 30 18 7 4 2.33333 1 10
4 14 10 40 26 9 3.5 2.25 2 10
5 18 10 50 32 13 3.6 2.6 4 10
6 24 10 60 36 19 4 3.16667 6 10
7 32 10 70 38 27 4.57 3.85714 8 10
8 42 10 80 38 37 5.25 4.625 10 10
9 54 10 90 36 49 6 5.44444 12 10
10 68 10 100 30 63 6.8 6.3 14 10
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