2. What is the Total Revenue? 3. What is the Average Fixed Cost? 4. What is the

ID: 1189836 • Letter: 2

Question

2. What is the Total Revenue?

3. What is the Average Fixed Cost?

4. What is the Average Variable Cost?

5. What is the Total Cost?

6. What is the Total Profit (or Loss)?

7. What is the profit-maximizing level of output?

8. What is the Average Variable Cost?

9. What is the Variable Cost?

10. What is the Total Cost?

11. What is the Fixed Cost?

12. What is the Average Fixed Cost?

13. At this level of output, what is the price?

14. What is the Total Revenue?

15. What is the Total Profit (or loss)?

Why does Marginal Cost intersect Average Total Cost at ATC’s lowest point?

Since there are too many questions, answering the numerical questions.

At equilibrium,

1. Price = $ 8

2. Total Revenue = $8 / gallon * 11 gallons = $88

3. Average Fixed Cost = Average Cost - Average Variable Cost

= 6 - 4 = $2 /gallon

4. Average Variable Cost = $ 4 per gallon (as per graph)

5. Total Cost = Average Cost * No of units = 6 * 11 = $ 66

6. Total Profit = (Average Revenue - Average Cost ) * No of units = (8 - 6) * 11 = $22

7. What is the profit-maximizing level of output? At equilibrium, max profit = $22

8. What is the Average Variable Cost? From the graph, $4 / gallon

9. What is the Variable Cost? $4 * 11 = $44

10. What is the Total Cost? $6 * 11 = $66

11. What is the Fixed Cost? $66 - $44 = $22

12. What is the Average Fixed Cost? $22/11 = $2 per gallon

13. At this level of output, what is the price? $8 per gallon

14. What is the Total Revenue? $8 * 11 = $88

15. What is the Total Profit (or loss)? $88 - $66 = $22

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