1. Calculate the fixed cost for 5 units of output.

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Presentation transcript:

1. Calculate the fixed cost for 5 units of output. FC VC TC AFC AVC ATC MC 30 1 10 2 18 3 22 4 56 5 64 6 76 7 15 8 1. Calculate the fixed cost for 5 units of output. 2. Calculate the value of the average total cost at 2 units of output. 3. Calculate the value of the marginal cost of the 3rd unit of output. 4. Calculate the marginal cost of the 8th unit of output

The difference between average total cost and average variable cost: A.is constant B. is total fixed cost C. gets narrower as output decreases D. is the average fixed cost

A firm's average total cost is $30 at 5 units of output and $32 at 6 units of output. The marginal cost of producing the 6th unit is: A. $2 B. $12 C. $32 D. $42

A firm producing 7 units of output has an average total cost of $15 A firm producing 7 units of output has an average total cost of $15. The firm pays $35 in fixed costs, whether it produces or not. How much of the average total cost is made up of variable costs? A. $20 B. $5 C. $30 D. $10

A firm has a variable cost of $100 at 5 units of output A firm has a variable cost of $100 at 5 units of output. If fixed costs are $40, what will be the average total cost at 5 units of output? A. $2 B. $12 C. $32 D. $42

A firm's average fixed cost is $20 at 6 units of output A firm's average fixed cost is $20 at 6 units of output. What will it be at 4 units of output? A.$60 B. $30 C. $40 D. $20

FC = 30 regardless of output 1. fixed costs - costs that are incurred even when nothing is being produced (rent, salaried employees) fixed costs are constant At 0 units of output, there are only fixed costs. FC = TC - VC FC = 30 - 0 FC = 30 at 5 units of output since FC are constant FC = 30 regardless of output Output FC VC TC AFC AVC ATC MC 30 1 10 2 18 3 22 4 56 5 64 6 76 7 15 8 3. VC start at production of 1 unit and will keep increasing. 2. If you are not producing anything, you still have to pay FC (land, factory payment or rent, business license, etc.) FC+VC= TC if you are only given TC, at 0 units of output, TC = FC. 4.Variable costs increase (change) as you increase quantity of output (produce more and more output) Calculate the fixed cost for 5 units of output. Calculate the value of the average total cost at 2 units of output. Calculate the value of the marginal cost of the 3rd unit of output. Calculate the marginal cost of the 8th unit of output 5. ATC=TC/Q FC + VC = TC 30+18=48 48/2 =12 ATC = 12 6. MC= the change in TC / the change in Q