Refer to Figure 11-8 above to answer the following questions. a. Identify the cu

Question

Refer to Figure 11-8 above to answer the following questions.

a.   Identify the curves in the diagram.

      A ________

      B ________

      C ________

b.   What is the numerical value of fixed cost when the quantity of output=10?

c.   What is the numerical value of variable cost when the quantity of output=10?

d.   What is the numerical value of total cost when the quantity of output =10?

e.   What is the numerical value of average fixed cost when the quantity of output =10?

f.    What is the numerical value of average total cost when the quantity of output =10?

g.   On the graph identify the area that represents the total variable cost of production when the quantity of output =10.

h.   On the graph identify the area that represents the fixed cost of production when the quantity of output =10.

Explanation / Answer

a. Curve A is marginal cost.

Curve B is Average Total cost.

Curve C is Average Variable cost.

For answer to (b), we first find answers to (c) and (d).

c. Average variable cost = $7.

AVC = Total variable cost/output.

7 = TVC/10

Total variable cost = $70.

d. Average total cost = Total cost/output.

22 = TC/10

total cost = $220.

b. Fixed cost = total cost - variable cost

Fixed cost = 220 - 70

FC = $150.

e. AFC = fixed cost/output

AFC = 150/10

AFC = $15

f. ATC = $22.

g. The area below the curve average variable cost represents the total variable cost, that is, the area [10 units of ouput-0 units of output-$7 and point e] is the variable cost.

h. The curve above variable cost and below total cost represents fixed costs. The area [ point e-$7-$22 and point d] is the fixed cost.

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.