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Q.19

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Economics Today
Found in: Page 509

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Short Answer

If this firm were to boost its output to 12 units of output and thereby raise its total variable costs to $54, what would be the resulting average fixed cost, average variable cost, average total cost, and marginal cost?

Average fixed cost is 0.83, average variable cost is 4.5, average total cost is 5.33, and marginal cost is 8.

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Step by Step Solution

Step 1: Introduction

The firm were to boost its output to12units of output.

total variable costs increased to$54

Step 2: Explanation 

The total fixed cost TFC = 10

Output Q = 12

Using the formula, the average fixed cost can be found,

AFC=TFCQ=1012=0.83

Average variable cost = localid="1652092155917" Total variable costQ

=5412=4.5

Step 3: Total cost

Average total cost =AFC+AVC

localid="1652511769768" =4.5+0.83

=5.33

The total fixed cost TFC = 10

Total cost = 64

Step 4:  Marginal cost 

Marginal cost =

=64-56

=8

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