ECON 102 Lecture Notes - Lecture 10: Average Variable Cost, Marginal Cost, Marginal Product
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A firm's fixed costs for 0 units of output and its average total cost of producing different output levels are summarized in the table below. Complete the table to find the fixed cost, variable cost, total cost, average fixed cost, the average variable cost, and marginal cost at all relevant levels of output.
Instruction: Round your answers for Average Fixed Cost (AFC) and Average Variable Cost (AVC) to 2 decimal places.
Q |
FC |
VC |
TC |
AFC |
AVC |
ATC |
MC |
0 |
$15,000 |
Ā | Ā |
- |
- |
- |
- |
100 |
Ā | Ā | Ā | Ā | Ā |
300 |
Ā |
200 |
Ā | Ā | Ā | Ā | Ā |
200 |
Ā |
300 |
Ā | Ā | Ā | Ā | Ā |
175 |
Ā |
400 |
Ā | Ā | Ā | Ā | Ā |
225 |
Ā |
500 |
Ā | Ā | Ā | Ā | Ā |
325 |
Ā |
600 |
Ā | Ā | Ā | Ā | Ā |
400 |
Ā |
Each unit of input, X, costs $10. Fixed costs are $50, regardless of the level of output.
a.Complete the table below.
Labor, X | Total Output (TPP) | Marginal Physical Product (MPP) | TFC | TVC | TC | AFC | AVC | ATC | MC/unit |
0 | 0 | ||||||||
1 | 15 | ||||||||
2 | 45 | ||||||||
3 | 70 | ||||||||
4 | 90 | ||||||||
5 | 105 | ||||||||
6 | 110 | ||||||||
7 | 112 |
b.If the product can be sold for $0.75 per unit, what is the optimal level of output?
C. Find the level of profit at the optimal level of output. Explain what would happen if the firm produced one more unit of output in terms of marginal cost and marginal revenue.
Given following Price and Total Cost functions:
P = 120 - 7Q
TC = 40 + 70Q - 10Q2 + 0.6Q3
Where P = price, and Q is output.
Fill in the table below and answer the questions below the table.
Q |
P |
FC |
TVC |
TC |
TR |
Profit |
0 |
Ā | Ā | Ā | Ā | Ā | Ā |
1 |
Ā | Ā | Ā | Ā | Ā | Ā |
2 |
Ā | Ā | Ā | Ā | Ā | Ā |
3 |
Ā | Ā | Ā | Ā | Ā | Ā |
4 |
Ā | Ā | Ā | Ā | Ā | Ā |
5 |
Ā | Ā | Ā | Ā | Ā | Ā |
6 |
Ā | Ā | Ā | Ā | Ā | Ā |
7 |
Ā | Ā | Ā | Ā | Ā | Ā |
8 |
Ā | Ā | Ā | Ā | Ā | Ā |
9 |
Ā | Ā | Ā | Ā | Ā | Ā |
10 |
Ā | Ā | Ā | Ā | Ā | Ā |
If your company's goal is to maximize profit, answer the following questions below:
What price will you charge for your product?
What quantity will you produce?
And what would be your maximum profit or minimum loss at the price and output you chose?
2. If your company's goal is to maximize total revenue, answer the following questions below:
What price will you charge for your product?
What quantity will you produce?
And what would be your maximum total revenue at the price and output you chose? (3 points)
Question 3
Given a firm with the following cost data, fill in the table below.
Q = OUTPUT TFC = Total Fixed Cost AVC = Average Variable Cost ATC = Average Total Cost TVC = Total Variable Cost MC = Marginal Cost TC = Total Cost
Ā
Q |
FC |
TVC |
TC |
AVC |
ATC |
MC |
0 |
Ā | Ā | Ā |
--- |
--- |
--- |
1 |
Ā | Ā | Ā | Ā | Ā |
10 |
2 |
Ā | Ā | Ā | Ā | Ā | Ā |
3 |
Ā | Ā | Ā |
10 |
Ā |
10 |
4 |
Ā | Ā | Ā | Ā | Ā | Ā |