Calculating TFC, AVC, TVC, TC, ATC, ATC and MC

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• Studying average and total cost curves

  Solution explains the formulas for calculating TFC, TVC, TC, MC, AFC, AVC and ATC. It also explains the shape and behavior of average and total cost curves.

• Calculating Various costs for given cost function.

  Plot the TFC, TFC and TC for the values of Q = 0, 1, 2, 3,.......... 10 b. Calculate the ATC, AVC and MTC and plot on another graph. c. Explain the relationships between ATC and MTC d.

• Calculating average and total costs

  MC will also be $100 for output level of 500 units. Solution describes the steps to calculate TVC, TFC, TC, AFC, ATC, AVC and MC for different output levels in the given case.

• Al’s Bicycle Town: Production and Costs

  Complete Table 3 by using your answers from the previous Tables and calculating the AVC, ATC, and MC.

• Analyzing and Calculating Production Costs

  at Q=0, At Q=0, TVC=0, So, TFC=TC-TVC=570-0=$570 *(810-570)/(1-0)=240 Formulas: AFC=TFC/Q AVC=TVC/Q TC=TVC+TFC ATC=AFC+AVC MC=change in TC/change in Q TR=P*Q Profit=TR-TC (b) What level of output should the firm produce?

• Production Costs Analysis

  Q TFC TVC TC=TFC+TVC AFC=TFC/Q AVC=TVC/Q ATC=ATC+AVC MC 0 $100 $0 $100 - --- --- --- 1 100

• average fixed cost (AFC) curve, average variable cost (AVC) curve, the average total cost (ATC) curve, and the marginal cost (MC)

  ATC = TC/Q = (TVC + TFC)/Q will rise because TC goes up as the fixed cost component of TC goes up. MC = Change in TC / Change in Q will NOT change because the change in TC between two quantities will still be just the change in variable costs.

• Analyzing production costs - Fixed and Variable costs

  Solution: Q TFC TVC TC=TFC+TVC AFC=TFC/Q AVC=TVC/Q ATC=TC/Q MC* 0 60 0 60 1 60 45 105 60.0 45.0 105.0 45.0 2 60 85

• Filling in a Cost spreadsheet

  The formulas for each type of cost are: TC = TFC + TVC TFC is constant TVC is given ATC = TC/Q AFC = TFC/Q AVC = TVC/Q MC = (difference in TC)/(difference in Q) Given a partially filled-in spreadsheet of a firm's costs, this solution gives the

• Own Price elasticity

  L Q TVC MPL APL AVC TFC TC ATC MC 0 0 0 0 0 0200 1 4 200 2 10 200 L Q TVC MPL APL AVC TFC TC ATC MC 0 0 0 0 0 0 200 200 0 200 1 4 30 4 4 7.5 200 230 57.5 7.5 2 10 60 6 5 6 200 260 26 5 TVC = Labor x cost per labor MPL = units produced