Question

The following table shows the Total Cost Schedule of a firm. Calculate Total Fixed Cost, Total Variable Cost, Average Variable Cost, Average Cost and Marginal Cost:
Q: 0, 1, 2, 3, 4, 5, 6
Total Cost: 10, 30, 45, 55, 70, 90, 120

Hint:

TFC = TC at Q=0; TVC = TC - TFC; AVC = TVC/Q; AC = TC/Q; MC = change in TC per unit.

Answer 1

Step 1: Set up the working table with a running check:
$Q$: 0,1,2,3,4,5,6 and $TC$: 10,30,45,55,70,90,120. Since $TFC$ is fixed at every output level, subtract 10 from each $TC$ value to isolate $TVC$: 0,20,35,45,60,80,110.

Step 2: Divide TVC by Q for AVC, and TC by Q for AC, at each output:
$AVC$: (20/1)=20, (35/2)=17.5, (45/3)=15, (60/4)=15, (80/5)=16, (110/6)=18.33. $AC$: (30/1)=30, (45/2)=22.5, (55/3)=18.33, (70/4)=17.5, (90/5)=18, (120/6)=20.

Step 3: Find MC as successive differences of TC (equivalently, of TVC, since TFC contributes nothing to the change):
Differences: 30-10=20, 45-30=15, 55-45=10, 70-55=15, 90-70=20, 120-90=30, giving MC = 20,15,10,15,20,30.

Step 4: Sanity-check with cost theory:
MC should cut both AVC and AC at their minimum points. Here AVC's minimum (15) occurs at Q=3 and Q=4 where MC also equals 10-15 — confirming the numbers are internally consistent with the U-shaped cost curve relationship.

Final Answer:
TFC=10 (constant); TVC=0,20,35,45,60,80,110; AVC=-,20,17.5,15,15,16,18.33; AC=-,30,22.5,18.33,17.5,18,20; MC=20,15,10,15,20,30.