Explanation Table - 1 shows the data for variable cost: Table – 1 Quantity of houses painted per month Variable cost 1 10 2 20 3 40 4 80 5 160 6 320 7 640 Average fixed cost can be calculated by using the following formula: Average fixed cost = ( Fixed cost Quantity ) (1) Substitute the respective value in equation (1) to calculate the average fixed cost for quantity 1: Average fixed cost = ( 200 1 ) = 200 Thus, the average fixed cost for quantity 1 is $200. Average variable cost can be calculated by using the following formula: Average variable cost = ( Variable cost Quantity ) (2) Substitute the respective value in equation (2) to calculate the average variable cost for quantity 1: Average varible cost = ( 10 1 ) = 10 Thus, the average variable cost cost for quantity 1 is $10 Total cost can be calculated by using the following formula: Total cost = Fixed cost + Variable cost (3) Substitute the respective value in equation (3) to calculate the total cost for quantity 1: Total cost = 200 + 10 = 210 Thus, the total cost for quantity 1 is $210

A fixed cost, average fixed cost, average total cost and average variable cost .

Principles of Microeconomics

7th Edition

ISBN: 9781305156050

Author: N. Gregory Mankiw

Publisher: Cengage Learning

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Chapter 13, Problem 7PA

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