Question

The table below indicates the total weekly costs of operating an X-ray clinic at different volumes...

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?

Homework Answers

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.

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