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A profit-maximizing firm in the short run has total fixed costs of $100. Its variable costs are...

Question:

A profit-maximizing firm in the short run has total fixed costs of $100. Its variable costs are as below.

Output Total Variable Cost
0 $0
1 $40
2 $72
3 $96
4 $124
5 $155
6 $192
7 $232
8 $280
9 $330
10 $430

(A) Calculate average total cost when output is five units.

(B) What is the marginal cost of the 7th unit?

Types of Costs:

In the domain of Economics, the total costs for a firm are usually categorized into fixed costs and variable costs. These costs may be again categorized into total costs, average costs and marginal costs to facilitate further analysis.

Answer and Explanation: 1

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Answer to A:

The average total cost for output of 5 units is given by:

{eq}\begin{align*} &= \dfrac{\text{(Total fixed costs + Total variable costs...

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Marginal Cost: Definition, Equation & Formula

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Chapter 3 / Lesson 12
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What is marginal cost? Learn how to calculate marginal cost with the marginal cost formula. See the definition, behavior, and marginal cost examples.


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