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# Relationship between the costs

See the attached file.
Exhibit 2 shows a firm's costs of production in the short run. First, complete Table 2 below. Based on the Table, answer the following:
a. Find TC, TFC and TVF for an output level of 3 units and 6 units.
b. You know the TC of producing 6 units and the MC producing the 6th unit. Can you find the TC of producing 5 units?
c. What would this firm's TFC be at an output of 10 units? 15 units?
d. Find AFC for output levels of 3 and 6 units. Are there 2 ways to get these numbers? Do they produce identical results?
e. Replicate Exhibit 2 and shade the area the represents Total Cost of producing 3 units. Which part of it is TFC? TVC?

(See chart and diagram in attached file).

#### Solution Preview

Please see the attached file.

Relationship between the costs

Exhibit 2 shows a firm's costs of production in the short run. First, complete Table 2 below. Based on the Table, answer the following:
a. Find TC, TFC and TVC for an output level of 3 units and 6 units.

Q TC TVC TVF
3 3*120 = 360 75*3 = 225 360 - 225 = 135
6 6*100 = ...

#### Solution Summary

Relationship between the costs is depicted and the details of the answer are discussed.

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