# Determining the minimum efficient scale

Your cousin Vinnie owns a painting company with fixed costs of $200 and the following schedule for variable costs:

Quantity of Houses Painted per month 1 2 3 4 5 6 7

Variable costs $10 $20 $40 $80 $160 $320 $640

Calculate average fixed cost, average variable cost, and average total cost for each quantity? What is the efficient scale for the painting company?

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#### Solution Preview

Please refer attached file for better clarity of tables

Q TFC TVC AFC=TFC/Q AVC=TVC/Q ATC=AFC+AVC

1 200 10 200.00 10.00 210.00

2 200 20 100.00 10.00 ...

#### Solution Summary

Solution describes the steps to calculate average costs and determines the efficient scale for the company.