Complete the following table of various types of cost for a firm in the short run. Assume that Total Fixed Cost equals $100.  Table relating Measures of Cost to level of Output Quantity of Output Total Variable Cost Total Cost Marginal Cost Average Fixed Cost Average Variable Cost  Average Total Cost  1 $20           2 $35           3 $45           4 $60           5 $80           6 $105           7 $140           8 $185           9 $250           10 $340           What do you notice about the shape of Average Fixed Cost that differs from the other per unit costs such as Average Variable Cost and Average Total Cost? What is the relationship between Marginal Cost and both Average Variable and Average Total Cost?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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  1. Complete the following table of various types of cost for a firm in the short run. Assume that Total Fixed Cost equals $100. 

Table relating Measures of Cost to level of Output

Quantity of Output Total Variable Cost Total Cost Marginal Cost Average Fixed Cost Average Variable Cost  Average Total Cost 
1 $20          
2 $35          
3 $45          
4 $60          
5 $80          
6 $105          
7 $140          
8 $185          
9 $250          
10 $340          

What do you notice about the shape of Average Fixed Cost that differs from the other per unit costs such as Average Variable Cost and Average Total Cost? What is the relationship between Marginal Cost and both Average Variable and Average Total Cost? 

 

  1. Imagine yourself running a pizza restaurant over a short term horizon. Think about the following potential changes in your costs. For each, try to discern which would affect your fixed costs from those that are variable costs. Specifically, how would each scenario shift your Average Variable Cost, Marginal Cost, and Average Total Cost curves? Explain your answers.
  • The wages of hourly workers increase
  • The cost of cheese increases

  • The rent on the building housing your restaurant increases

  • The price of gasoline (for pizza delivery) decreases

Please submit your answers to these questions as a Word document file upload, and watch the following video for further understanding of the various costs we have been studying. 

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