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Refer to the following table and answer the questions below
Refer to the following table and answer the questions below.
| Q | TFC | TVC | TC | AVC | MC |
| 0 | 10 | 0 | |||
| 1 | 16 | 6 | |||
| 2 | 4 | ||||
| 3 | 12 | 4 |
1) What are total fixed costs?
2) What is the marginal cost of the first unit of output?
3) What is the total cost of 2 units of output?
4) What is the total variable cost of 2 units of output?
5) What is the marginal cost of the third unit of output?
Expert Solution
1) 10
Fixed costs are equal to total cost at output level 0 which in this case is 10.
2) 6
The marginal cost for the first unit of output is given in the marginal cost columns at output level 1 which is 6.
3)20
Total cost at 2 units of output is equal to total cost at 1 unit of output plus marginal cost at 2 units of output which is 16+4=20
4)10
Total variable costs at 2 units of output is the sum of marginal costs at or below 2 units of output which is 6+4=10
5)2
The marginal cost of the third unit of output is the difference between total variable costs between output levels 2 and 3 which is 12-10=2
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