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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

For each lettered space in the following table, determine the appropriate dollar amount:

images

To determine

Illustrate the value of average fixed cost, average variable cost, total cost, average total cost, and marginal cost.

Explanation

Average fixed cost:

Average fixed cost can be calculated using the following formula:

Average fixed  cost=(Total fixed costQuantity)        (1)

Average fixed cost:

If fixed cost is 200 and the quantity is 1, then the average fixed cost can be calculated using Equation (1) as follows:

Average fixed  cost=(Total fixed costQuantity)=2001=200

Thus, if output is 1, then the value of average fixed cost is $200.

Average variable cost:

Average variable cost can be calculated using the following formula:

Average variable  cost=(Total variable costQuantity)        (2)

Average variable cost:

If total variable cost is 30 and the quantity is 1, then the average variable cost can be calculated using Equation (2) as follows:

Average variable  cost=(Total variable costQuantity)=301=30

Thus, if the output is 1, then the value of average variable cost is $30.

Total cost:

Total cost can be calculated using the following formula:

Total cost=Toal fixed cost+Total variable cost        (3)

Total cost:

If total variable cost is 30 and total fixed cost is 200, then the total cost can be calculated using Equation (3) as follows:

Total cost=Toal fixed cost+Total variable cost=200+30=230

Thus, if output is 1, then the value of total cost is $230

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