4. COST RELATIONSHIPS. A firm's total costs can be broken down into fixed costs (e.g., rent) and variable costs (e.g., payroll), so TC = FC + VC. Dividing by quantity converts these to averages, so TC/Q = FC/Q + VC/Q, or ATC = AFC + AVC. The additional cost incurred by producing one additional unit is the marginal cost, so MC = ATCIAQ, where the Greek letter delta (A) means "a change in." Here is a table showing the various costs for a simple firm that sells a product using a building (capital, a fixed input) and workers (labor, a variable input). Assume that the price of labor is 20 and the price of capital is 120. Use these three cost relationships to complete the table. Total Total Output, Q Marginal Cost, MC Labor, Сapital, K Total Average Variable Average Fixed Cost, Average Total Variable Fixed Cost, TC Cost, Cost, TVC Cost, Cost, АТС TFC AVC AFC 1 120 N/A N/A N/A N/A 1 1 160 3 1 20 3 6. 1 40

4. COST RELATIONSHIPS. A firm's total costs can be broken down into fixed costs (e.g., rent) and variable costs (e.g., payroll), so TC = FC + VC. Dividing by quantity converts these to averages, so TC/Q = FC/Q + VC/Q, or ATC = AFC + AVC. The additional cost incurred by producing one additional unit is the marginal cost, so MC = ATCIAQ, where the Greek letter delta (A) means "a change in." Here is a table showing the various costs for a simple firm that sells a product using a building (capital, a fixed input) and workers (labor, a variable input). Assume that the price of labor is 20 and the price of capital is 120. Use these three cost relationships to complete the table. Total Total Output, Q Marginal Cost, MC Labor, Сapital, K Total Average Variable Average Fixed Cost, Average Total Variable Fixed Cost, TC Cost, Cost, TVC Cost, Cost, АТС TFC AVC AFC 1 120 N/A N/A N/A N/A 1 1 160 3 1 20 3 6. 1 40

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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how Marginal cost been calculated here. {MC=Change in ATC/Change in Q} please explian still not clear!!