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Refer to the following table and answer the questions below

Economics Dec 15, 2020

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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