1. Units Of Output TFCTVCTCMCAFCAVC 0 1 2 3 4 5 46 1304 20 10 18 Marginal Cost Puzzle 20

2. Units Of Output TFCTVCTCMCAFCAVC 0 1 2 3 4 5 46 1304 20 10 18 Marginal Cost Puzzle 20 Step 1 : AFC * Q = TFC. TFC never changes. So 4 x 5 = 20 = TFC 20

3. Step 2: AVC x Q = TVC So, 18 x 4 = 72 and 10 x 1 = 10 Units Of Output TFCTVCTCMCAFCAVC 0 1 2 3 4 5 46 1304 20 10 18 Marginal Cost Puzzle 20 10 72 20

4. Units Of Output TFCTVCTCMCAFCAVC 0 1 2 3 4 5 46 1304 20 10 18 Marginal Cost Puzzle 20 10 72 Step 3: TVC at quantity of zero is 0, because no variable inputs needed Step 4: MC = Change in TC / Change in Q. But, Change in Q = 1, So, TC = 66 at an output of 3, since MC = 20 between outputs 2 and 3. 66 0 20

5. Units Of Output TFCTVCTCMCAFCAVC 0 1 2 3 4 5 46 1304 20 10 18 Marginal Cost Puzzle 20 10 72 66 0 Step 5 : TFC + TVC = TC, so working down the first three columns, fill in all of TC and TVC. 20 30 26 46 92 110 20

6. Units Of Output TFCTVCTCMCAFCAVC 0 1 2 3 4 5 46 1304 20 10 18 Marginal Cost Puzzle 20 10 72 66 020 30 26 46 92 110 Step 6 : Use definition of MC to fill in column MC = Change in Costs / Change in Quantity 10 16 46 20 26 38

7. Units Of Output TFCTVCTCMCAFCAVC 0 1 2 3 4 5 46 1304 20 10 18 Marginal Cost Puzzle 20 10 72 66 020 30 26 46 92 110 10 16 46 20 26 38 Step 7 : Use AFC and AVC definitions to fill in Table. AFC x Q = TFC AVC x Q = TVC 13 10 6.6715.33 5 22 20 NR