Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Based on the information in the table below, the marginal cost (MC) of the second unit of output is:
| Quantity of Output (Q) | Total Variable Cost (TVC) | Total Cost (TC) |
|------------------------|---------------------------|-----------------|
| 0 | $___ | $9 |
| 1 | --- | 14 |
| 2 | 8 | --- |
| 3 | --- | 19 |
| 4 | 11 | --- |
| 5 | 12 | --- |
Options:
- ⭕ $8
- ⭕ $3
- ⭕ $6
- ⭕ $2
### Explanation of the Diagram:
The table provides information on the Total Variable Cost (TVC) and Total Cost (TC) corresponding to different quantities of output (Q). It appears some costs are missing, which may be filled in using the relationships between the columns.
To calculate the marginal cost of the second unit, you would typically calculate the change in total cost when going from one unit of output to two units.
The question implies a multiple-choice format, where you are to select the estimated marginal cost from the given options.
![## Question 4
Based on the information in the table below, calculate the average variable cost (AVC) for three units of output.
### Table:
| Quantity of Output (Q) | Total Variable Cost (TVC) | Total Cost (TC) |
|------------------------|---------------------------|-----------------|
| 0 | $--- | $10 |
| 1 | --- | 14 |
| 2 | 7 | --- |
| 3 | --- | 22 |
| 4 | 18 | --- |
| 5 | --- | 36 |
### Options:
- O $4
- O $12
- O $3.33
- O $7.33
### Explanation:
To find the average variable cost (AVC) when the output is three units, use the formula:
\[ \text{AVC} = \frac{\text{Total Variable Cost (TVC)}}{\text{Quantity of Output (Q)}} \]
From the table, when the output is three units, the total cost (TC) is $22, and there is no direct TVC given. However, you may infer that the TVC for Q = 3 can be calculated by subtracting the fixed cost (inferred as $10 from TC at Q = 0) from the total cost.
Thus, calculate the TVC at Q = 3:
\[ \text{TVC} = \text{TC} - \text{Fixed Cost} = 22 - 10 = 12 \]
Now calculate the AVC:
\[ \text{AVC} = \frac{12}{3} = 4 \]
Therefore, the average variable cost for three units of output is $4.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc2669eda-9b5e-4782-990a-c84390c355a0%2F8fbeadde-51f4-4d21-89a2-ec2b0282cb74%2Fwsfoj16_processed.jpeg&w=3840&q=75)
Transcribed Image Text:## Question 4
Based on the information in the table below, calculate the average variable cost (AVC) for three units of output.
### Table:
| Quantity of Output (Q) | Total Variable Cost (TVC) | Total Cost (TC) |
|------------------------|---------------------------|-----------------|
| 0 | $--- | $10 |
| 1 | --- | 14 |
| 2 | 7 | --- |
| 3 | --- | 22 |
| 4 | 18 | --- |
| 5 | --- | 36 |
### Options:
- O $4
- O $12
- O $3.33
- O $7.33
### Explanation:
To find the average variable cost (AVC) when the output is three units, use the formula:
\[ \text{AVC} = \frac{\text{Total Variable Cost (TVC)}}{\text{Quantity of Output (Q)}} \]
From the table, when the output is three units, the total cost (TC) is $22, and there is no direct TVC given. However, you may infer that the TVC for Q = 3 can be calculated by subtracting the fixed cost (inferred as $10 from TC at Q = 0) from the total cost.
Thus, calculate the TVC at Q = 3:
\[ \text{TVC} = \text{TC} - \text{Fixed Cost} = 22 - 10 = 12 \]
Now calculate the AVC:
\[ \text{AVC} = \frac{12}{3} = 4 \]
Therefore, the average variable cost for three units of output is $4.
Expert Solution
Step 1
The organizations in a market measure different types of costs, and they all are related to each other. Such types of cost are:
- Total cost (variable and fixed)
- Average cost (variable and fixed)
- Marginal cost
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