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Homework answers / question archive / Output oil changes per hour Total cost dollars per hour 0 10 1 20 2 35 3 50 4 80 The above table gives the total cost schedule for oil changes at the local Jiffy Lube
| Output oil changes per hour | Total cost dollars per hour |
|---|---|
| 0 | 10 |
| 1 | 20 |
| 2 | 35 |
| 3 | 50 |
| 4 | 80 |
The above table gives the total cost schedule for oil changes at the local Jiffy Lube.
a. What is Jiffy Lube's total fixed cost?
b. What is the total variable cost of 2 oil changes?
c. What is the average variable cost of 4 oil changes?
d. What is the average fixed cost of 2 oil changes?
e. What is the marginal cost of the 3rd oil change?
a. Total variable cost depends upon output whereas total fixed cost does not depend on output and remains fixed.
Total Cost = Total fixed cost + Total variable cost
At output level 0, total variable cost is 0.
10 = Total fixed cost + 0
=> Total fixed cost = 10
b) Total variable cost = Total Cost - Total fixed cost
=> Total variable cost = 35 - 10 = 25
c)Total variable cost = Total Cost - Total fixed cost
=> Total variable cost = 80 - 10 = 70
d)
e) Marginal cost for 3rd oil change = Total cost for 3rd oil change - Total cost for 2nd oil change
=> Marginal cost for 3rd oil change = 50 - 35 = 25
