5 6 2400 3400 3600 4600 Given the following monthly data for alternative operati

Question

5

6

2400

3400

3600

4600

Given the following monthly data for alternative operating levels at the St. Christopher’s Ambulance, calculate the total fixed cost, average fixed cost, average variable cost, average total cost, and marginal cost for successive output levels. If St. Christopher’s is operating at a level of three trips and it wants to determine the resources needed to make another trip, which statistic will it use?

ambulance trips total variable cost total cost 0 0 1200 1 1300 2500 2 1400 2600 3 1500 2700 4 1800 3000

5

6

2400

3400

3600

4600

Explanation / Answer

1200(variable

cost is 0)

2500 - 1300 =1200

(TC - TVC)

1300 (TC of 1 unit

- TC of 0 unit)

The amount of resources needed to make another trip would be ascertained by the MARGINAL COST.Marginal cost depicts the additional cost incurred while producing an additional unit.

Ambulance trips Total variable cost Total cost Total fixed cost Average fixed cost Average variable cost average total cost marginal cost 0 0 1200

1200(variable

cost is 0)

1200/0 =infinity.(output is 0) undefined (0/0) undefined.(infinity + undefinedf) undefined 1 1300 2500

2500 - 1300 =1200

(TC - TVC)

1200/1 = 1200(TFC/Q) 1300/1 = 1300(TVC/Q) 1200 + 1300 = 2500(AFC + AVC)

1300 (TC of 1 unit

- TC of 0 unit)

2 1400 2600 2600 - 1400 =1200 1200/2 = 600 1400/2 = 700 600 + 700 =1300 2600 - 2500 = 100 3 1500 2700 2700 - 1500 =1200 1200/3 =400 1500/3 =500 500 + 400 =900 2700 - 2600 =100 4 1800 3000 3000 - 1800 =1200 1200 /4 =300 1800/4 =450 300 + 450 =750 3000 - 2700 =300 5 2400 3600 3600 - 2400 =1200 1200/5 =240 2400/5 =480 240 + 480=720 3600 - 3000 =600 6 3400 4600 4600 - 3400 = 1200 1200/6 = 200 3400/6 =566.7 200 + 566.7 =766.7 4600 - 3600 =1000

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