   Chapter 8, Problem 1WNG

Chapter
Section
Textbook Problem

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