Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 11, Problem 10P
To determine
The schedule for total costs, fixed costs, variable costs,
Expert Solution & Answer
Answer to Problem 10P
| Total Product (Q) | Fixed Cost (FC) | Variable Cost (VC) | Total Cost (TC) | Average Fixed Cost (AFC) | Average Variable Cost (AVC) | Average Cost (AC) | Marginal Cost (MC) |
| 1 | 100 | 30 | 130 | 100 | 30 | 130 | 30 |
| 2 | 100 | 50 | 150 | 50 | 25 | 75 | 20 |
| 3 | 100 | 60 | 160 | 33.33 | 20 | 53.33 | 10 |
| 4 | 100 | 64 | 164 | 25 | 16 | 41 | 4 |
| 5 | 100 | 90 | 190 | 20 | 18 | 38 | 26 |
| 6 | 100 | 126 | 226 | 16.67 | 21 | 37.67 | 36 |
| 7 | 100 | 168 | 268 | 14.28 | 24 | 38.28 | 42 |
| 8 | 100 | 218 | 318 | 12.5 | 27.25 | 39.75 | 50 |
Explanation of Solution
Using the following formulas, we calculate the values of the table.
| Total Product (Q) | Fixed Cost (FC) | Variable Cost (VC) | Total Cost (TC) | Average Fixed Cost (AFC) | Average Variable Cost (AVC) | Average Cost (AC) | Marginal Cost (MC) |
| 1 | 100 | 30 | 130 | 100 | 30 | 130 | 30 |
| 2 | 100 | 50 | 150 | 50 | 25 | 75 | 20 |
| 3 | 100 | 60 | 160 | 33.33 | 20 | 53.33 | 10 |
| 4 | 100 | 64 | 164 | 25 | 16 | 41 | 4 |
| 5 | 100 | 90 | 190 | 20 | 18 | 38 | 26 |
| 6 | 100 | 126 | 226 | 16.67 | 21 | 37.67 | 36 |
| 7 | 100 | 168 | 268 | 14.28 | 24 | 38.28 | 42 |
| 8 | 100 | 218 | 318 | 12.5 | 27.25 | 39.75 | 50 |
Economics Concept Introduction
Total cost: TC are the total outlay in production activity.
Fixed costs: FC are the costs that once incurred remain same at all levels of output.
Variable costs: VC are the costs that vary with the level of output.
Average total cost: ATC is the total cost per unit of output.
Average fixed cost: AFC is the fixed cost per unit of output.
Average variable cost: AVC is the variable cost per unit of output.
Marginal Cost: MC is an add on to the total cost (or total variable cost) when an extra unit of output is produced.
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