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Car manufacturer's total cost of producing cars

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The accompanying table shows a car manufacturer's total cost of producing cars.

Quantity of cars TC
0 $500,000
1 540,000
2 560,000
3 570,000
4 590,000
5 620,000
6 660,000
7 720,000
8 800,000
9 920,000
10 1,100,000

a. What is this manufacturer's fixed cost?
b. For each level of output, calculate the variable cost (VC). For each level of output except zero output, calculate the average variable cost (AVC), average total cost (ATC), and average fixed cost (AFC). What is the minimum-cost output?
c. For each level of output, calculate this manufacturer's marginal cost (MC).
d. On one diagram, draw the manufacturer's AVC, ATC, and MC curves.

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Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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