Answer to Question #287210 in Microeconomics for Sunflower

Question

you are thinking of setting up a cendol stall. The stall itself will cost RM200. The ingredients for each bowl of cendol will cost RM0.50. Construct a table showing your total cost, average total cost, and marginal cost for output levels varying from 0 to 10 litre of cendol. Draw the three cost curves.

(Hint: There are 16 bowls in a litre of cendol. 

 

Answer 1

TC = 200 + 8Q,

Q TC ATC MC

0 200 - -

1 208 208 8

2 216 108 8

3 224 74.7 8

4 232 58 8

5 240 48 8

6 248 41.3 8

7 256 36.6 8

8 264 33 8

9 272 30.2 8

10 280 28 8.

TC curve is upward-sloping, ATC curve is downward-sloping, MC curve is constant.