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Question
A firm’s average fixed cost, when it produces 2 units, is Rs 30. Its average total cost schedule is given below. Calculate its marginal cost and average variable cost at each level of output.
|
Output (units) |
1 |
2 |
3 |
|
Average Total Cost (Rs) |
80 |
48 |
40 |
Solution
|
Output |
Average Total Cost |
Average Fixed Cost |
Total Fixed Cost |
Average Variable Cost |
Total Variable Cost |
Total Cost |
Marginal Cost |
|
|
(ATC) |
(AFC) |
(TFC) |
(AVC) |
(TVC) |
(TC) |
(MC) |
|
1 |
80 |
60 |
60 |
20 |
20 |
80 |
– |
|
2 |
48 |
30 |
60 |
18 |
36 |
96 |
16 |
|
3 |
40 |
20 |
60 |
20 |
60 |
120 |
24 |
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Cost - Average Fixed Cost
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Average fixed cost curve ____________.
Complete the following table :
| Output Units |
Marginal Cost Rs |
Average Variable Cost Rs | Total Cost Rs |
Average Fixed Cost Rs |
| 1 | 60 | ...... | 120 | ...... |
| 2 | ...... | ...... | 174 | ...... |
| 3 | ...... | 54 | ...... | ...... |
| 4 | 54 | ...... | ...... | 15 |
| 5 | ...... | 57 | 345 | ...... |
