Assume that a firm is a perfectly competitive industry has the following total c

Question

Assume that a firm is a perfectly competitive industry has the following total cost schedule:

Outputs (units) <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /?>

Total Cost ($)

10

$110

15

$150

20

$180

25

$225

30

$300

35

$385

40

$480

a. Calculate a marginal cost and average cost schedule for this firm.

Outputs (units) <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /?>

Total Cost ($)

10

$110

15

$150

20

$180

25

$225

30

$300

35

$385

40

$480

Explanation / Answer

Average cost = sum of total cost / sum of outputs = (110+150+180+225+300+385+480)/(10+15+20+25+30+35+40) = $ 10.46....................................... marginal cost = (480 - 110 ) /(40-10) = 370/30 = $ 12.33

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