Question

A firm’s fixed costs for 0 units of output and its average total cost of producing different output levels are summarized in the table below. Complete the table to find the fixed cost, variable cost, total cost, average fixed cost, average variable cost, and marginal cost at all relevant levels of output.

Short answer

Q	FC	VC	TC	AFC	AVC	ATC	MC
0	15000	0	15000	-	-	-	0
100	15000	15000	30000	150	150	300	15000
200	15000	25000	40000	75	125	200	1000
300	15000	37500	52500	50	125	175	12500
400	15000	75000	90000	37.5	187.5	225	37500
500	15000	147500	162500	30	295	325	72500
600	15000	225000	240000	25	375	400	77500

Step-by-step solution

Definition of costs:

Total cost: It indicates the cost borne by the firm to purchase inputs that are required for a production process. An increase in cost implicates the increase in variable cost of the company.

Fixed cost: It implicates the cost of fixed assets of a company that the company owns from the starting of its business.

Variable cost: It signifies the cost borne by the firm time to time for increasing its input factors such as labor and capital at different periods.

Marginal cost: It is the change in the total cost caused due to the change in the overall output level of the firm.

To calculate the cost values:

Total Cost (TC)= Fixed Cost(FC) + Variable Cost(VC)

Average Total Cost (ATC) = Total Cost/Quantity

Average Fixed Cost (AFC) =Fixed Cost / Quantity

Average Variable Cost (AVC) = Variable cost/Quantity

Marginal Cost (MC)= Change in Total Cost/Change in Total Quantity

Q	FC	VC	TC	AFC	AVC	ATC	MC
0	15000	0	15000	-	-	-	0
100	15000	15000	30000	150	150	300	15000
200	15000	25000	40000	75	125	200	1000
300	15000	37500	52500	50	125	175	12500
400	15000	75000	90000	37.5	187.5	225	37500
500	15000	147500	162500	30	295	325	72500
600	15000	225000	240000	25	375	400	77500