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Using Excel to Calculate All Cost Curves

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Cost Data

Consider the following cost functions:
TC = 20 + 4Q
TC = 20 + 2Q + 0.5Q2
TC = 20 + 4Q - 0.1Q2

Using Excel, calculate all cost curves using a range of quantity from 0 to 15.
Total cost
Total fixed Cost
Total variable cost
Average total cost
Average fixed cost
Average variable cost
Marginal cost

Plot these curves on graphs
Compare the cost curves and discuss their characteristics.

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Solution Summary

Cost curves are calculated and graphed in excel. These cost curves are compared and discussed. The curve curves are total cost, total fixed cost, total variable cost, average total cost, average fixed cost, average variable cost, and marginal cost.

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Cost Data

Cost Data (Excel application)

TC = 20 + 4Q

TC = 20 + 2Q + 0.5Q2

TC = 20 + 4Q - 0.1Q2

Using Excel, calculate all cost curves using a range of quantity from 0 to 15.
Total cost
Total fixed Cost
Total variable cost
Average total cost
Average fixed cost
Average variable cost
Marginal cost

Plot these curves on graphs
Compare the cost curves and discuss their characteristics.

Solution Guide

To calculate the average and marginal costs, use the following formulas:
ATC = TC÷Q
AFC = TFC÷Q
AVC = TVC÷Q
MC = change in TC ÷ change in Q

Using the numbers in the tables, plot the different cost curves using Excel graphing features.
The cost numbers are plotted on the vertical axis (y).
The quantity numbers are plotted on the horizontal axis (x).

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