Question

The table below indicates the total weekly costs of operating an X-ray clinic at different volumes of output (i.e., X-rays).

# of X-rays	Total Operating Cost/Week $	Average Total Cost $	Marginal Cost $
0	9,200
20	16,300
40	22,350
60	28,800
80	34,400
100	45,200
120	58,000

-Do the necessary calculations to enter the correct amounts in the last two columns. Remember, marginal cost is defined as the extra cost of providing the service to one more patient.

-What is the fixed cost of running the X-ray clinic? How do you know?

-Given the fixed cost above, what is the total variable cost of providing 80 X-rays? What is the average variable cost at that output level?

Answer 1

Following is the complete table -

Output	Total Operating Cost	Average Total Cost	Marginal Cost
0	9200	-	-
20	16300	815	355
40	22350	558.75	302.50
60	28800	480	322.50
80	34400	430	280
100	45200	452	540
120	58000	483.33	640

The total cost at the zero level of output is the fixed cost. Also, fixed cost remains same at each level of output.

The total operating cost at zero level of output (X-rays) is $9,200.

So, the fixed cost is $9,200.

Total cost of 80-X rays = 34400

Fixed cost of 80 X-rays = 9200

Total variable cost = TC - FC = 34400 - 9200 = 25200

The Total Variable Cost of providing 80 X-rays is $25,200.

AVC = TVC/Q = 25200/80 = 315

The average variable cost at that level of output is $315.