Continue analyzing the production for a firm.  Use the Total Variable Costs calculated in the previous table.  You also need to calculate Total Fixed Cost, Marginal Cost, Total Cost, Average Total Cost, and Average Variable Cost. Use this information to calculate the Total Fixed Cost (TFC). The firm made a capital investment of $40,000 and the normal rate of return is 7%.  The firm has an annual lease agreement that costs $20,000. TFC will be the same for all quantities - even though you enter it only once, remember to add it in for each row to calculate TC. Please note that this time, our quantity is increasing by 1,000 each time.  Therefore, you'll have to calculate Marginal Cost as the Change in Total Variable Cost divided by the Change in Quantity.  As stated, the change in quantity is 1,000. For MC, ATC, and AVC: round to 2 decimal places!!! Write down your table to use it for the next question. q TFC TVC (from prior problem) MC TC ATC AVC 0   0 0   0 0 1,000             2,000             3,000             4,000             5,000             6,000             7,000             8,000             9,000             10,000

ENGR.ECONOMIC ANALYSIS
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Author:NEWNAN
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Chapter1: Making Economics Decisions
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Continue analyzing the production for a firm.  Use the Total Variable Costs calculated in the previous table. 

You also need to calculate Total Fixed Cost, Marginal Cost, Total Cost, Average Total Cost, and Average Variable Cost.

Use this information to calculate the Total Fixed Cost (TFC). The firm made a capital investment of $40,000 and the normal rate of return is 7%.  The firm has an annual lease agreement that costs $20,000. TFC will be the same for all quantities - even though you enter it only once, remember to add it in for each row to calculate TC.

Please note that this time, our quantity is increasing by 1,000 each time.  Therefore, you'll have to calculate Marginal Cost as the Change in Total Variable Cost divided by the Change in Quantity.  As stated, the change in quantity is 1,000.

For MC, ATC, and AVC: round to 2 decimal places!!!

Write down your table to use it for the next question.

q TFC TVC (from prior problem) MC TC ATC AVC
0   0 0   0 0
1,000            
2,000            
3,000            
4,000            
5,000            
6,000            
7,000            
8,000            
9,000            
10,000            

 

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