Output AFC AVC ATC MC 0 $ --- $ --- $ --- $ --- 1 300 100 400 100 2 150 75 225 50 3 100 70 170 60 4 75 73 148 82 5 60 80 140 108 6 50 90 140 140 7 43 103 146 182 8 38 119 156 234 9 33 138 171 283 10 30 160 190 361 How much is fixed cost (TFC)? The total fixed cost is 300. For the following questions, first check: a) is P greater than or equal to, AVC at any level of output? If not, do not produce. You will lose only your fixed cost (TFC) If you CAN cover AVC for some level of output, you can produce and want to now get MC as close to MR (which in this case = price) without exceeding it. Produce that quantity. If you can’t cover your total costs, you will minimize your losses. If you CAN cover your total costs (and therefore earn an economic profit), you will maximize your profit. If price is $50 per unit, how many would we produce? If price is $105 per unit If price is $145 per unit
Output AFC
0 $ --- $ --- $ --- $ ---
1 300 100 400 100
2 150 75 225 50
3 100 70 170 60
4 75 73 148 82
5 60 80 140 108
6 50 90 140 140
7 43 103 146 182
8 38 119 156 234
9 33 138 171 283
10 30 160 190 361
- How much is fixed cost (TFC)?
The total fixed cost is 300.
For the following questions, first check: a) is P greater than or equal to, AVC at any level of output? If not, do not produce. You will lose only your fixed cost (TFC)
If you CAN cover AVC for some level of output, you can produce and want to now get MC as close to MR (which in this case = price) without exceeding it. Produce that quantity. If you can’t cover your total costs, you will minimize your losses. If you CAN cover your total costs (and therefore earn an economic profit), you will maximize your profit.
- If price is $50 per unit, how many would we produce?
- If price is $105 per unit
- If price is $145 per unit
- If price is $190 per unit
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
