Hints on doing HW #1 on p. 11 of chapter 6

# Hints on doing HW #1 on p. 11 of chapter 6 - ATC AVERAGE...

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Here are examples to calculate the various types of cost 1. How to calculate VC from TC? You need to derive FC. Look where the output is zero. Then FC = TC because VC is zero when out put is zero. 2. How to calculate Marginal (dollar) cost Marginal dollar cost : MC = change in total cost / change in total output. Output TC ΔTC/ΔQ = MC 0 \$12 0 - P 10 205 \$85 /10 =\$8.5 Q 15 245 40 / 5 = \$8.0 R 20 270 25 / 5 = \$5.0 S 30 360 90 / 10 = \$9.0 3. How to calculate average fixed cost ( AFC ), average variable cost ( AVC ) and average total cost (

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Unformatted text preview: ATC) AVERAGE COSTS IN THE SHORT RUN Output ( Q ) Fixed Cost (FC) AFC = FC/ Q Variable Cost (VC) AVC = VC/ Q Total cost (TC) ATC = TC/ Q 0 Pairs \$120 \$120/0 \$0 \$0/0 \$120=FC 120/0 10 120 120/10=12 \$85 \$85/10= 8.5 205 205/10=20.50 15 120 120/15=8 125 125/15=8.33 245 245/15=16.33 20 120 120/20= 6 150 150/20= 7.5 270 270/20=13.50 30 120 ? 240 240/30= 8.0 360 360/30=12.00 40 120 ? ? 8.75 470 11.75 50 120 ? ? 11.00 670 13.40 51 120 120/51=2.35 ? ? 753 ?...
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Hints on doing HW #1 on p. 11 of chapter 6 - ATC AVERAGE...

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