Fill in the blanks in the table below, and use it to answer this question. Short

Question

Fill in the blanks in the table below, and use it to answer this question.

Short-Run Costs

*What is the firm’s fixed cost? Explain.

*Based on the table, what can you say about the relationshipbetweenMC and ATC? Why does this occur?

*Based on the table, what can you say about the relationship between AVC and ATC? Why does this occur?

Quantity (Q) Variable Cost (VC) Total Cost (TC) Marginal Cost (MC) Average Variable Cost (AVC) Average Fixed Cost (AFC) Average Total Cost (ATC) 1 30 90 2 50 110 3 90 150 4 140 200 5 200 260

Explanation / Answer

The firms fixed cost is 60= the difference between total cost and variable cost at all units is same

Both marginal cost and ATC shared inverse relationship till unit 3. on unit 4 it got equa from 5 units both increased together, sharing same reltaionship.

Between AVC and ATC initiall upto unit 3 ATC decreased however there was fluctuation in AVC but from unit 4 onwards teh ATC gets increased.

quantity variable cost total cost marginal cost avg variable cost avg fixed cost avg total cost 1 30 90 0 30 60 90 2 50 110 20 25 30 55 3 90 150 40 30 20 50 4 140 200 50 35 15 50 5 200 260 60 40 12 52

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