1.Consider the information in the attached file. The AVC and ATC curves imply th

Question

1.Consider the information in the attached file. The AVC and ATC curves imply that the fixed cost of production equals ?dollars.

2.Consider the information in the attached file. The average total cost (ATC) of producing 3 units of output equals ?dollars.

3.Consider the information in the attached file. The marginal cost of producing the 7th unit equals ?dollars.

The following graph shows the AVC and ATC functions for a firm. In SmartSite, enter your answers with no dollar signs, commas, or decimal places (unless otherwise stated) $1,000 $900 $700 $600 $500 S400 $200 $100 $0 2 4 5 10

Explanation / Answer

1. 1800 (gap in two curves multiplied by number of units; for example at 6 units AVC = 300 and ATC = 600 i.e. AFC = 300 TFC = 300*6 = 1800)

2. ATC = AVC +AFC

AVC at 3 units = $200

AFC = 1800/2 = 900

ATC = 900+200 = $1100

3. MC = TVCn-TVCn-1

TVC at7 units-TVC at 6 units

400*7-300*6

2800-1800 = 1000

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