Question

If this firm were to boost its output to 12 units of output and thereby raise its total variable costs to $54, what would be the resulting average fixed cost, average variable cost, average total cost, and marginal cost?

Short answer

Average fixed cost is $0.83$, average variable cost is$4.5$, average total cost is $5.33$, and marginal cost is $8$.

Step-by-step solution

Introduction

The firm were to boost its output to$12$units of output.

total variable costs increased to$\$54$

Explanation 

The total fixed cost TFC = $10$

Output Q = $12$

Using the formula, the average fixed cost can be found,

$AFC=\frac{TFC}{Q}$$=\frac{10}{12}$$=0.83$

Average variable cost = localid="1652092155917" $\frac{Totalvariablecost}{Q}$

$=\frac{54}{12}=4.5$

Total cost

$\text{Average total cost}=AFC+AVC$

localid="1652511769768" $=4.5+0.83$

$=5.33$

The total fixed cost TFC = $10$

Total cost = $64$

 Marginal cost 

Marginal cost =

$=64-56$

$=8$