Question

Suppose that a firm produces 10 units of output. Its Average Variable Cost (AVC) = $25, Average Fixed Cost (AFC) = $5, and Marginal Cost (MC) = $30. The firm's ________.

a.) Total cost is $300

b.)Average total cost (ATC) is $60

c.) Average total cost (ATC) is $35

d.)Total cost is $30

Answer #1

Given, Output = 10 , Average Variable Cost = $25 , Average Fixed Cost = $5, Marginal Cost = $30

**Total Cost = Total Variable Cost + Total Fixed
Cost**

**-Total Variable Cost = Average Variable Cost *
Output**

Total Variable Cost = $25 * 10 = $250

**Total Variable Cost = $250**

**-Total Fixed Cost = Average Fixed Cost *
Output**

Total Fixed Cost = $5 * 10 = $50

**Total Fixed Cost = $50**

So,

- Total Cost = $250 + $50 = $300
- Average Total Cost = TC
**/**Output = 300/10 =$30

**A).** Our total cost is $300 as we can see in the
above calculations. Hence, this option is
**correct**.

**B).** This option is **incorrect**
as our average total cost is $30, not $60 as given in this
option.

**C).** This option is again
**incorrect** as our average total cost is $30, not
$35 as given in this option.

**D).** This Option is **incorrect**
as our total cost is $300, not $30 as given in this option.

Suppose average variable cost (avc) of producing 5 units is $30,
and average total cost (atc) of producing 5 units is $50. What is
the fixed cost for this firm?

A firm estimated its short-run costs using an average variable
cost function of the form
AVC = a + bQ +
cQ2
And obtained the following results. Total fixed cost is
$1,500.
DEPENDENT VARIABLE:
AVC
R-SQUARE
F-RATIO
P-VALUE ON F
OBSERVATIONS:
40
0.8273
88.65
0.0001
VARIABLE
PARAMETER ESTIMATE
STANDARD ERROR
T-RATIO
P-VALUE
INTERCEPT
38.05
11.87
3.21
0.0028
Q
-4.20
1.56
-2.69
0.106
Q2
0.30
0.09
3.33
0.0020
The estimated marginal cost function is:
MC = 38.05 – 8.4Q +
0.9Q2...

A firm produces 7 unit(s) with a total cost ( TC) of
91.873. Its TC at 8 units is 100.93, while its VC
at 8 is 70.928. This means that ____.
A.
the average fixed costs (AFC) of 8 units is 38.5
B.
the average variable costs (AVC) of 8 units is going to
be 38.5
C.
the marginal cost (MC) of the unit 8 is 10.01
D.
the average fixed costs (AFC) of 7 unit(s) is 4.286

Assume the short run variable cost function for Japanese beer is
VC=0.5q^0.67 If the fixed cost? (F) is ?$2400 and the firm produces
400 ?units, determine the total cost of production? (C), the
variable cost of production? (VC), the marginal cost of production?
(MC), the average fixed cost of production? (AFC), and the average
variable cost of production? (AVC). What happens to these costs if
the firm increases its output to 500? Determine (C), (VC), (MC),
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Use the table below to answer the next 3 questions
Units of Output
Total Fixed Cost
Total Variable Cost
1
$1000
$200
2
450
3
800
4
1350
5
1950
8. Given the cost schedule above, it can be seen that the MC of
the 3rd unit produced is
(a)
$350
(c) $600
(b)
$550
(d) $800
9. AFC is
(a) constant at all
levels of
output
(c) the difference
between AVC and ATC
(b) less than MC when
MC...

Suppose you are given the following information:
Price of variable input is $40/unit; Price of fixed input is
$50/unit
a. Using the above information, complete the followingtable
Units of Fixed Input
Units of Variable Input
Output
Marginal Product
TFC
TVC
AFC
AVC
ATC
MC
2
0
0
2
1
10
2
2
25
2
3
45
2
2
2
2
4
5
6
7
8
70
100
125
140
150
b. Draw graphs for AFC, AVC, ATC, and MC....

ECON 2106
1. Short run marginal costs rise because of
(a) rising prices of
variable
inputs
(b) declining
productivity of fixed factors of production
(c) diminishing
marginal productivity of variable
inputs
(d) reduced incentives
to work in large plants
2. When average total cost is declining as output
increases, marginal cost must be
(a)
declining
(c) above average total
cost
(b) below average
total
cost
(d) rising
3. Total cost is $30 at 10 units of output and $32 at...

Mark and Jeff operate a small company that produces souvenir
footballs. Their fixed cost is $2,000 per month. They can hire
workers for $1,000 per worker per month. Their monthly production
function for footballs is as given in the accompanying table.
Quantity of labor
Quantity of footballs
0
0
1
300
2
800
3
1,200
4
1,400
5
1,500
(a) For each quantity of labor, calculate average variable cost
(AVC), average fixed cost (AFC), average total cost (ATC), and
marginal...

The table below shows output, fixed, variable, and total costs
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Output
Fixed Cost (FC)
Variable Cost (VC)
Total Cost (TC)
Avg. Fixed Cost (AFC)
Avg. Variable Cost (AVC)
Avg. Total Cost (ATC)
Marginal Cost (MC)
0
5
0
1
7
2
10
3
9
4
19
5
25
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Output(tons)
FC($)
VC($)
TC($)
AFC($)
AVC($)
ATC($)
MC($)
250
200
450
300
200
500
350
200
570
400
200
660
450
200
780
b) Draw the typical shapes of the average costs (AFC,AVC, ATC)
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c) Explain the relationship between Marginal cost and Average
total cost.

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