Purchase Solution

# Calculating a firm's costs: Formulas and examples

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Calculate the following short-run costs for a firm:

Q = 0, TC = 20: what is the fixed cost?
Q = 1, MC = 20: what is the total cost when Q = 1?
Q = 2, AVC = 15: what is average total cost when Q = 2?
Q = 3, TC = 77: what is marginal cost when Q = 3?
Q = 4, TVC = 76: what is marginal cost when Q = 4?

##### Solution Summary

This solution shows the correct formulas to use when calculating a firm's costs and illustrates with concrete examples.

##### Solution Preview

>Q = 0, TC = 20: what is the fixed cost?

When Quantity (Q) = 0, Variable Cost (VC) is also 0, so the Fixed Cost (FC) must be 20.

>Q = 1, MC = 20: what is the total cost when Q = 1?

The Marginal Cost (MC) is the cost of producing an ...

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