Economics20805 marksNumerical: cost curves computationCost schedule computations
Cost Schedule Analysis Consider the following cost schedule: a) At TFC = 120, compute TC, AFC, AVC, and ATC. | Output | TVC | TC | AFC | AVC | ATC | |--------|-----|-----|-----|-----|-----| | 0 | 0 | 120 | - | - | - | | 1 | 50 | 170 | 120 | 50 | 170 | | 2 | 90 | 210 | 60 | 45 | 105 | | 3 | 120 | 240
Cost Schedule Analysis
Consider the following cost schedule:
a) At TFC = 120, compute TC, AFC, AVC, and ATC.
| Output | TVC | TC | AFC | AVC | ATC |
|---|---|---|---|---|---|
| 0 | 0 | 120 | - | - | - |
| 1 | 50 | 170 | 120 | 50 | 170 |
| 2 | 90 | 210 | 60 | 45 | 105 |
| 3 | 120 | 240 | 40 | 40 | 80 |
| 4 | 140 | 260 | 30 | 35 | 65 |
| 5 | 175 | 295 | 24 | 35 | 59 |
| 6 | 230 | 350 | 20 | 38.33 | 58.33 |
| 7 | 310 | 430 | 17.14 | 44.29 | 61.43 |
b) Draw the graph of AFC, AVC, and ATC.
[Graph showing three curves:
- AFC (Average Fixed Cost): downward sloping hyperbola approaching zero
- AVC (Average Variable Cost): U-shaped curve with minimum around output 3-4
- ATC (Average Total Cost): U-shaped curve with minimum around output 5-6, always above AVC by the distance of AFC]
[5]
- TFC = 120 (constant across all output levels) - Output: 0, 1, 2, 3, 4, 5, 6, 7 - TVC: 0, 50, 90, 120, 140, 175, 230, 310 Formulas: - $TC = TFC + TVC$ - $AFC = TFC / Q$ - $AVC = TVC / Q$ - $ATC = TC / Q = AFC + AVC$ Computation table: Q TVC TC = 120+TVC AFC = 120/Q AVC = TVC/Q ATC = TC/Q -------...