For graphing paper #1 Y axis = total fixed cost (TFC), total variable cost (TVC), and total cost (TC) X axis = output • For graphing paper #2 Y axis = average fixed cost (AFC), average variable cost (AVC), average total cost (ATC), and marginal cost X axis = output
For graphing paper #1 Y axis = total fixed cost (TFC), total variable cost (TVC), and total cost (TC) X axis = output • For graphing paper #2 Y axis = average fixed cost (AFC), average variable cost (AVC), average total cost (ATC), and marginal cost X axis = output
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter4: Extent (how Much) Decisions
Section: Chapter Questions
Problem 3MC
Related questions
Question
Given are the formulas for computing. Read the instructions below and do as indicated. Answer the questions below. Then make graphs. (You don't need to post the answers for the computation. What I need are the graphs)
• For graphing paper #1
Y axis = total fixed cost (TFC), total variable cost (TVC), and total cost (TC)
X axis = output
• For graphing paper #2
Y axis = average fixed cost (AFC),
X axis = output
![COSTS OF PRODUCTION FORMULAS
Total cost (TC) = total fixed cost (TFC) + total variable cost
(TVC) Total Product (TP)
- Average fixed cost (AFC) = TFC ÷ output or total
product or quantity
Average variable cost = TVC ÷ output or total
product or quantity
- Marginal cost (MC)= change in total Cost (TC) ÷
change in TP or output
- Average total cost (ATC) = AFC + AVC or
- Average Total Cost = TC ÷ TP
- Total Revenue (TR) = price x TP
-
%3D
-
- Total Profit/Loss = TR – TC
-
- Break even : TR – TC = 0
Hypothetical problem
A corn farmer produces 300 sacks of corn at 50 kgs./sack.
Prevailing price of corn/sack is P1,200.
He incurred the following annual expenses (P):
Fixed costs: land rent @5,000; irrigation fee@3,000; warehouse @2,500;
insurance @3,000; interest on loan @4,200; entrepreneuship@7,000;
salaries/wages@10,000; taxes@4,600; depreciation@2,600
Variable costs: seeds@5,000; fertilizer@10,500: labor@18,000;
pesticides@8,000; tractor@3,000; transportation,@3,500.
Compute for:
1. Total Cost, Total Fixed Cost, Total Variable Cost
2. Average total cost, average fixed cost, average variable cost
3. Total Revenue, average revenue
4. Total profit or Loss](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdf9c5ec6-ed04-42e9-8e73-0ed561bf0c61%2Fa5f4d720-6aa1-4a69-8979-dbd282b010a7%2Fpb9ri6r_processed.jpeg&w=3840&q=75)
Transcribed Image Text:COSTS OF PRODUCTION FORMULAS
Total cost (TC) = total fixed cost (TFC) + total variable cost
(TVC) Total Product (TP)
- Average fixed cost (AFC) = TFC ÷ output or total
product or quantity
Average variable cost = TVC ÷ output or total
product or quantity
- Marginal cost (MC)= change in total Cost (TC) ÷
change in TP or output
- Average total cost (ATC) = AFC + AVC or
- Average Total Cost = TC ÷ TP
- Total Revenue (TR) = price x TP
-
%3D
-
- Total Profit/Loss = TR – TC
-
- Break even : TR – TC = 0
Hypothetical problem
A corn farmer produces 300 sacks of corn at 50 kgs./sack.
Prevailing price of corn/sack is P1,200.
He incurred the following annual expenses (P):
Fixed costs: land rent @5,000; irrigation fee@3,000; warehouse @2,500;
insurance @3,000; interest on loan @4,200; entrepreneuship@7,000;
salaries/wages@10,000; taxes@4,600; depreciation@2,600
Variable costs: seeds@5,000; fertilizer@10,500: labor@18,000;
pesticides@8,000; tractor@3,000; transportation,@3,500.
Compute for:
1. Total Cost, Total Fixed Cost, Total Variable Cost
2. Average total cost, average fixed cost, average variable cost
3. Total Revenue, average revenue
4. Total profit or Loss
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