The following table shows the daily relationship between the number of workers a

Question

The following table shows the daily relationship between the number of workers and output (Q) for a small factory in the short run, with capital held constant. Each worker cost $200 per day, and the firm has fixed costs of $25 per day. Calculate the total cost (TC), marginal cost (MC), and average total cost (ATC)

(Please round the answers to 2 decimal places and show your work)

Workers               Q             TC           MC         ATC

0                              0             

1                              40          

2                              88          

3                            141   

4                             183   

5                             201

Explanation / Answer

Marginal cost for Q=40= Increase in total cost/Increase in number of units (225-25)/(40-0)= 5.00

ATC= Total cost/Q= 225/40=5.63

Workers Q TC MC ATC 0 0 25 - - 1 40 225           5.00           5.63 2 88 425           4.17           4.83 3 141 625           3.77           4.43 4 183 825           4.76           4.51 5 201 1025         11.11           5.10

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