Calculation and graphical representation of tfc

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Reference no: EM1315380

A firm has fixed costs of $60 and variable costs as indicated in the table below. Complete the table.

Total product

Total fixed cost

Total variable cost

Total cost

Average fixed cost

Average variable cost

Average total cost

Marginal cost

 

 

 

 

 

 

 

 

0

$____

$0

$____

 

 

 

 

1

_____

45

_____

$____

$____

$____

$____

2

_____

85

_____

_____

_____

_____

_____

3

_____

120

_____

_____

_____

_____

_____

4

_____

150

_____

_____

_____

_____

_____

5

_____

185

_____

_____

_____

_____

_____

6

_____

225

_____

_____

_____

_____

_____

7

_____

270

_____

_____

_____

_____

_____

8

_____

325

_____

_____

_____

_____

_____

9

_____

390

_____

_____

_____

_____

_____

10

_____

465

_____

_____

_____

_____

_____

a. Graph total fixed cost, total variable cost, and total cost.  Explain how the law of diminishing returns influences the shapes of the total variable-cost and total? Cost curves.

b. Graph AFC, AVC, ATC, and MC.  Explain the derivation and shape of each of these four curves and their relationships to one another.  Specifically, explain in nontechnical terms why the MC curve intersects both the AVC and ATC curves at their minimum points.

c. Explain how the locations of each of the four curves graphed in question 7b would be altered if (1) total fixed cost had been $100 rather than $60, and (2) total variable cost had been $10 less at each level of output.

Reference no: EM1315380

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