Problem 1. Use the following information to determine the total fixed costs, total variable costs, average fixed costs, average variable costs, average total costs, and marginal costs.
Total Output Costs TFC TVC AFC AVC ATC MC
0 $100
1 $150
2 $225
3 $230
4 $300
5 $400
Total Output Cost TFC TVC AFC AVC ATC MC
0 $ 20
10 $ 40
20 $ 60
30 $ 90
40 $120
50 $180
60 $280
Problem 2. Use the following table to answer the questions listed below.
a. Calculate the total fixed costs, total variable costs, average fixed costs, average variable costs, average total costs, and marginal costs.
b. Plot each of the cost curves.
c. At what quantity of output does marginal cost equal average total cost and average variable cost?
Problem 3. Using the table in problem 1, explain what happens to ATC when MC _ ATC, MC _ ATC, and MC _ ATC.
Problem 4. Using the table in problem 2, find the quantity where MC _ ATC. Find the quantity where ATC is at its minimum. Find the quantity that is the most efficient operating point for the firm
Problem 5. Explain why the ATC and MC curves are U-shaped.
Problem 6. Explain why the short-run marginal-cost curve must intersect the short-run average-total-cost curve at the minimum point of the ATC. Does the marginal-cost curve intersect the average-variable-cost curve at its minimum point? What about the average-fixed-cost curve? Why doesn’t the marginal-cost curve also intersect the average-fixed-cost curve at its minimum point?