Question

1. Fill in the following table with the missing cost information.

Output	Total Fixed Cost	Total Variable Cost	Total Cost		Average Fixed Cost	Average Variable Cost		Average Total Cost	Marginal Cost
1	—	—	$650	—			—	—	—
2	—	—	$740	—			—	—	—
3	—	—	—	—			—	—	$120
4	—	$510	—	—			—	—	—
5	$500	—	—	—			—	—	$180

Answer 1

Ans:

Output	Total Fixed Cost	Total Variable Cost	Total Cost	Average Fixed Cost	Average Variable Cost	Average Total Cost	Marginal Cost
1	$500	$150	$650	$500	$150	$650	$150
2	500	240	740	250	120	370	90
3	500	360	860	166.67	120	286.67	120
4	500	510	1010	125	127.50	252.5	150
5	500	690	1190	100	138	238	180

Explanation:

Fixed costs are available even at zero level of output and remain constant throughout the subsequent level of production.

Total cost = Total Fixed Cost + Total Variable Cost

Average Fixed Cost =  Total Fixed Cost / Quantity

Average Variable Cost =  Total Variable  Cost / Quantity

Average Fixed Cost =  Total Cost / Qunatity

Marginal  Cost = Change in Total Cost / Change in Qunatity