The table below represents the cost schedule for Medusa, a bread making bakery i
ID: 1224041 • Letter: T
Question
The table below represents the cost schedule for Medusa, a bread making bakery in Microland.
Output
(breads per hour)
Total cost
(dollars per hour)
0
10
1
20
2
35
3
50
4
80
a) What is Medusa’s total fixed cost?
b) What is the total variable cost for 2 breads?
c) What is the average variable cost for 4 breads?
d) What is the average fixed cost for 2 breads?
e) What is the marginal cost for the 3rd bread?
Explain your answers.
Output
(breads per hour)
Total cost
(dollars per hour)
0
10
1
20
2
35
3
50
4
80
Explanation / Answer
a) Medusa's total fixed cost is $ 10 because the firm has to bear a cost of $ 10 even when the output is zero .
b) The total variable cost for 1 bread is $ 10 and for the second bread it is $ 15 . The total variable cost for 2 breads is $ 25 .
c) The variable cost for 4 breads is $ 70 and average variable costs for 4 breads = $ 70 / 4
average variable costs for 4 breads = $ 17.50
d) fixed cost for 2 breads = $ 10
average fixed costs for 2 breads =$ 10/2
average fixed costs for 2 breads = $ 5
e) The marginal cost for 3rd bread = $ 50 - $ 35
marginal cost for 3rd bread = $ 15
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