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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

Answer the following:

  1. a. If TVC = $80 and AVC = 4, then what does quantity (Q) equal?
  2. b. If total cost is $40 when Q = 2 and total cost is $45 when Q = 3, then what does marginal cost equal?
  3. c. What does average fixed cost equal at Q = 2 if total variable cost is $15 at Q = 2?
  4. d. Why does the AFC curve get continually closer to the horizontal axis in Exhibit 6(c) as quantity of output increases?

(a)

To determine

Calculate the value of output (Q).

Explanation

If total variable cost is $80 and the average variable cost is 4, then the value of quantity can be calculated as follows:

Average variable cost=Total variable costQuantity

(b)

To determine

Calculate the value of marginal cost.

(c)

To determine

Calculate the average fixed cost.

(d)

To determine

Reason for downward sloping average fixed cost curve.

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