Suppose that your colleague has accidentally spilled coffee on his laptop and th

Question

Suppose that your colleague has accidentally spilled coffee on his laptop and the file containing your firm's cost data has been damaged. Use your knowledge of cost functions to save the day (and your friend's job) by determining the missing cost data. Round your answers to 2 digits after the decimal Quantity Marginal Cost Fixed Cost Variable CostTotal Cost AFC AVC ATC S45.00 2 $68.00 $105.00 4 $50.00 $360.00 What is the marginal cost for the first unit? What is the average total cost of the 3rd unit? What is the total cost when producing zero units? What is the average variable cost for the 4th unit? Number Number click to edit Number Number

Explanation / Answer

Ans:

Table showing quantity and cost

Total cost = variable cost + fixed cost

Average variable cost = variable cost / quantity

Average fixed cost = Fixed cost / quantity

Average total cost = Total cost / quantity

Average variable cost for 1 unit is $45, which means variable cost for first unit is $45.

marginal cost is the change in cost for producing the additional output.marginal cost for 2 units = total cost for 2 units - total cost for 1 unit, marginal cost for 4 units = total cost for 4 units - total cost for 3 units,

Total cost for 3 units = total cost for 2 units + given marginal cost

Variable cost for 3 units = total cost for 3 units - fixed cost

Quantity Marginal cost Fixed cost Variable cost Total cost AFC AVC ATC 0 - $50 - $50 - - - 1 $45 $50 $45 $95 $50 $45 $95 2 $23 $50 $68 $118 $25 $34 $59 3 $105 $50 $173 $223 $16.67 $57.67 $74.3 4 $137 $50 $310 $360 $12.5 $103.3 $90

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