Question

a. Complete the table below

Output	TC	AFC	AVC	ATC	MC
1		$400	$100		$100
2		200	75
3		133	70
4		100	73
5		80	80
6		67	90
7		57	103
8		50	119
9		44	138
10		40	150

b. Determine what total costs (TC) would be for zero output.

Answer 1

A.

Output	AFC	AVC	TC	TFC	TVC	ATC	MC
1	400	100	500	400	100	500	100
2	200	75	550	400	150	275	50
3	133	70	609	399	210	203	59
4	100	73	692	400	292	173	83
5	80	80	800	400	400	160	108
6	67	90	942	402	540	157	142
7	57	103	1120	399	721	160	178
8	50	119	1352	400	952	169	232
9	44	138	1638	396	1242	182	286
10	40	150	1900	400	1500	190	262

TC = TFC + TVC

TFC = AFC * OUTPUT

TVC = AVC * OUTPUT

MC = TC2-TC1 / CHANGE IN OUTPUT

= 550 - 500 / 2-1 = 50

ATC = TC / OUTPUT

B. when output is zero , the total cost will be the fixed cost that business incurs even when no output is produced. The cost will be TFC = 400