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
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: The Cost Of Production
Section: Chapter Questions
Problem 3CQQ
Related questions
Question
![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 = ATC/AQ, 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
Average
Variable
Cost,
Сapital,
Output,
Q
Labor,
Total
Average
Fixed
Average
Total
Cost,
Marginal
Cost, MC
Variable
K
Fixed
Cost, TC
Cost,
Cost,
TFC
Cost,
TVC
AVC
AFC
АТС
1
120
N/A
N/A
N/A
N/A
1
2
1
160
3
1
20
3
6.
1
40](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6871a655-6df9-491d-9e6a-d916a0d3d66e%2Fc79d45fe-6dbd-4aa3-acf7-538ebbbf25f4%2F1jxntn_processed.png&w=3840&q=75)
Transcribed Image Text: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 = ATC/AQ, 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
Average
Variable
Cost,
Сapital,
Output,
Q
Labor,
Total
Average
Fixed
Average
Total
Cost,
Marginal
Cost, MC
Variable
K
Fixed
Cost, TC
Cost,
Cost,
TFC
Cost,
TVC
AVC
AFC
АТС
1
120
N/A
N/A
N/A
N/A
1
2
1
160
3
1
20
3
6.
1
40
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