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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View this answerAnswer 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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