Answer to Question #298990 in Microeconomics for Abi

Question

1.   By using the knowledge of relationships among the various costs of production concepts fill the blank space of the following table

Quantity TC TFC TVC ATC AVC MC

0 125

  10 5

20 105

30 110

40 255

50 3

60 3

Answer 1

i)TVC=TC-TFC$\therefore$ (125-125=0,(5-125)=-120,(105-125)=-20,(110-125)=-15,(255-125)=130, (3-125)=-122,(3-125)=-122

so TVC values are; 0,-120,-20,-15,130,-122,-122

ii)ATC=$\frac {TC}{OUTPUT}$ $\therefore$ ($\frac{125}{0}$ )=0 ,$(\frac{5}{10})$ =0.5 ,$\frac {105}{20}$ =5.25, $\frac{110}{30}$ =3.66, $\frac{255}{40}$ =6.375, $\frac{3}{50}$ =0.06, $\frac{3}{60}$=0.05

thus TVC values are; 0 , 0.5, 5.25, 3.66, 6.75, 0.06, 0.05

iii)AVC=$\frac{TVC}{OUTPUT}$ =$\frac{0}{0}$ 0, $-\frac{120}{10}$ =-12, $-\frac{20}{20}$=-1 ,$-\frac{15}{30}$ =-0.5, $\frac{130}{40}$ =3.25, $-\frac{122}{50}$ =-2.44, $-\frac{122}{60}$ =-2.033

values of AVC are;0, -12, -1, -0.5, 3.25, -2.44, -2.0333

iv) MC=$\frac{change in TC}{change in output(Q)}$ =($\frac{5-125}{20-10})$ =-12, $(\frac{105-5}{30-20})$ =10, $(\frac{110-105}{40-30})$=0.5, $(\frac{255-105}{50-40})$ =14.5, $(\frac{3-255}{60-50})$ =-12.2

the first and the last MC are =0

the MC values are; 0, -12, 10, 0.5, 14.5,-12.2, 0