Question

Complete the given table : 

 

Hint:

TFC is the vertical intercept of the TC curve. It is always equal to the TC when production is zero. This is a crucial starting point for completing any cost table.

Answer 1

Step 1: Understanding the Concept: 
Cost theory identifies different components of production costs: 
- TFC (Total Fixed Cost): Costs that do not change with output (Total Cost at 0 output). 
- TVC (Total Variable Cost): Costs that vary with the level of output (\(TC - TFC\)). 
- AFC (Average Fixed Cost): \(\frac{TFC}{Q}\). 
- AVC (Average Variable Cost): \(\frac{TVC}{Q}\). 
Step 2: Key Formula or Approach: 
1. \(TFC = TC\) at output 0. 
2. \(TVC = TC - TFC\). 
3. \(AFC = TFC / \text{Units}\). 
4. \(AVC = TVC / \text{Units}\). 
Step 3: Detailed Explanation: 
At Units = 0, \(TC = 50\). Since TVC is zero at zero output, \(TFC = 50\). 
TFC remains constant at all levels of output. 
Calculations: 
- Units 0: \(TFC = 50\), \(TVC = 50 - 50 = 0\), \(AFC = \infty\), \(AVC = -\) 
- Units 1: \(TC = 90, TFC = 50, TVC = 90 - 50 = 40, AFC = 50/1 = 50, AVC = 40/1 = 40\) 
- Units 2: \(TC = 140, TFC = 50, TVC = 140 - 50 = 90, AFC = 50/2 = 25, AVC = 90/2 = 45\) 
- Units 3: \(TC = 200, TFC = 50, TVC = 200 - 50 = 150, AFC = 50/3 = 16.67, AVC = 150/3 = 50\) 
- Units 4: \(TC = 280, TFC = 50, TVC = 280 - 50 = 230, AFC = 50/4 = 12.5, AVC = 230/4 = 57.5\) 
Step 4: Final Answer: