Question

1. Assuming one of the retailers has the following cost schedule for a particular product:

Output (tones)	Fixed Cost	Variable Cost	Total Cost	Average Fixed Cost-AFC	Average Variable Cost-AVC	Average Total Cost	Marginal Cost-
						-ATC	MC
1	30	2
2		5
3		9
4		14
5		20
6		27
7		35
8		44
9		54
10		65
11		77
12		90
13		104
14		119

1. Complete the table above.

(Hint: use excel table to do the calculation.)

2. Before the pandemic the market price was 10, what is the retailer’s optimal output quantity? How much profit was the producer able to make in this case?   

3. Due to the panic buying the market price increased to 12. How much profit was the retailer able to make at this price?

Answer 1

Output (tones)	FIXED COST	VARIABLE COST	TOTAL COST	AFC	AVC	AC	MC
1	30	2	32	30	2	32	0
2	30	5	35	15	2.5	17.5	3
3	30	9	39	10	3	13	4
4	30	14	44	7.5	3.5	11	5
5	30	20	50	6	4	10	6
6	30	27	57	5	4.5	9.5	7
7	30	35	65	4.285714	5	9.285714	8
8	30	44	74	3.75	5.5	9.25	9
9	30	54	84	3.333333	6	9.333333	10
10	30	65	95	3	6.5	9.5	11
11	30	77	107	2.727273	7	9.727273	12
12	30	90	120	2.5	7.5	10	13
13	30	104	134	2.307692	8	10.30769	14
14	30	119	149	2.142857	8.5	10.64286	15