the formula for AFC, AVC, ATC, MC, TR, MR fred333 asked The market price faced b
ID: 1234065 • Letter: T
Question
the formula for AFC, AVC, ATC, MC, TR, MRfred333 asked
The market price faced by this firm is $6.00 per widget.
a. Fill in the formula for AFC, AVC, ATC, MC, TR, MR, and Total Profit
b. Fill in the missing values for TFC, TVC, AFC, AVC, ATC, MC, TR, MR,
Total Profit Output 0 10 20 30 40 50 60 70 80 90 100
Total Fixed Cost
Total Variable Cost
Total Cost $100 150 180 200 240 300 375 475 600 750 1,000
Average Fixed Cost
Average Variable Cost Average Total Cost
Marginal Cost
Total Revenue
Marginal Revenue
Total Profit
c. Determine the profit maximizing level of output. Explain how you arrived at that conclusion.
Thank you
Explanation / Answer
So first: Fixed cost is the cost regardless of the quantity of output. We see at 0 output, the total cost is 100, so this is the fixed cost for all levels of output. T Fixed Cost 100 100 100 100 100 100 100 100 100 100 100 Variable cost is Total Cost-Fixed Cost T Variable Cost 0 50 80 100 140 200 275 375 500 650 900 Average Fixed Cost is Fixed Cost/Output AFC n/a 10 5 3.33 2.5 2 1.67 1.43 1.25 1.11 1 Average Variable cost is Variable Cost/Output AVC n/a 5 4 3.33 3.5 4 4.58 5.36 6.25 7.22 9 Average Total Cost is Total Cost/Output AVC n/a 5 4 3.33 3.5 4 4.58 5.36 6.25 7.22 9 MC is the Change in Cost from the previous level of Output MC n/a 50 30 20 40 60 75 100 125 150 250 Total Revenue is Output * price ($6) TR 0 60 120 180 240 300 360 420 480 540 600 Marginal revenue is the change in revenue from the previous level of output MR n/a 60 60 60 60 60 60 60 60 60 60 Total Profit is Total Revenue - Total Cost TP -100 -90 -60 -20 0 0 -15 -55 -120 -210 -400 The profit maximizing level of output is where marginal cost = marginal revenue, this occurs at the point where 50 units of output are produced Price Output T Fixed Cost T Variable Cost Total Cost AFC AVC ATC MC TR MR TP 6 0 100 0 100 n/a n/a n/a n/a 0 n/a -100 6 10 100 50 150 10 5 15 50 60 60 -90 6 20 100 80 180 5 4 9 30 120 60 -60 6 30 100 100 200 3.33 3.33 6.67 20 180 60 -20 6 40 100 140 240 2.5 3.5 6 40 240 60 0 6 50 100 200 300 2 4 6 60 300 60 0 6 60 100 275 375 1.67 4.58 6.25 75 360 60 -15 6 70 100 375 475 1.43 5.36 6.79 100 420 60 -55 6 80 100 500 600 1.25 6.25 7.5 125 480 60 -120 6 90 100 650 750 1.11 7.22 8.33 150 540 60 -210 6 100 100 900 1000 1 9 10 250 600 60 -400
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