The following is a cost schedule for A & E Manufacturing Company Ltd for product X. Quantity(Q)FixedCostVariable CostTotal CostMarginal CostAverage Fixed CostAverage Variable CostAverage Total Cost0 100 1 30 2 25 3 60 4100 18 Required:Calculate the missing costs and complete the schedule. On one diagram, plot and label the Marginal Cost curve, the Average Fixed Cost curve, Average Variable Cost Curve and the Average Total Cost curve. Explain the relationship which exists between the Marginal Cost Curve and the Average Total Cost Curve. What accounts for the ‘U’ shape of the Average Total Cost Curve?

Fixed cost is independent of output produced thus FC=$100

Answered: antity (Q) Fixed Cost Variable Cost…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The following is a cost schedule for A & E Manufacturing Company Ltd for product X.

Quantity (Q)	Fixed Cost	Variable Cost	Total Cost	Marginal Cost	Average Fixed Cost	Average Variable Cost	Average Total Cost
0			100
1		30
2						25
3		60
4	100					18

Required:

Calculate the missing costs and complete the schedule.
On one diagram, plot and label the Marginal Cost curve, the Average Fixed Cost curve, Average Variable Cost Curve and the Average Total Cost curve.
Explain the relationship which exists between the Marginal Cost Curve and the Average Total Cost Curve.
What accounts for the ‘U’ shape of the Average Total Cost Curve?

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