Answer to Question #165393 in Macroeconomics for retaa aga

Question

Question two: The total cost equation of a firm is given by the equation where TC is total cost and Q is the level of output.

 

a. What is the firm’s total fixed cost?

b. What is the equation for the firm’s total variable cost (TVC)?

c. What is the equation for the firm’s average total cost (ATC)?

d. What is the equation for the firm’s marginal cost (MC)?

Answer 1

Question two: The total cost equation of a firm is given by the equation where TC is total cost and Q is the level of output.

a. What is the firm’s total fixed cost?

Total fixed cost is the total sum of all the fixed costs. The other way of finding the total fixed costs is doing a subtracting the total cost from the variable costs. The formula would therefore be: TFC= Sum of all fixed costs. Next formula is TFC=TC-VC

b. What is the equation for the firm’s total variable cost (TVC)?

The formula for calculating total variable cost is by doing a multiplication of the cost of one unit of a product with the total number of products. In this case total variable cost can be calculated by; TVC=Total output quantity x variable cost of each output unit

c. What is the equation for the firm’s average total cost (ATC)?

The average total cost is the figure obtained from dividing all the total costs by the level of output. The formula is indicated below;

ATC=TC/Q

d. What is the equation for the firm’s marginal cost (MC)?

Marginal cost is defined as the change which arises from the total cost when a unit of the product fluctuates. The marginal cost is calculated by the change in total cost, the initial and final value then divided by level of output. The formula is therefore;

MC=TC1-TC2/Q