Question

Hello! Need some help figuring out MC, TVC, AFC,and ATC. A firm producing100 units of output at a total cost of $800. The firm's average variable cost is $5 per unit.

Answer 1

First, you need to know what they stand for.

1. MC = Marginal Cost
2. TVC = Total Variable Cost
3. AFC = Average Fixed Cost
4. ATC = Average Total Cost

Question: A firm is producing 100 units of output at a total cost of $800. The firm's average variable cost is $5 per unit.

1. Marginal cost = the cost of producing 1 extra unit of output.

Total cost = $800.
Number of units = $100

Divide 800 by 100 = 8
it costs $8 on average to produce 1 unit. To produce an extra unit, it should cost another $8... So I'd say $8 is the MC

2. Total Variable Cost = total cost - fixed cost, although you have to change it up a bit for this questions and use application:

The average variable cost = $5 per unit
Total number of units produced = 100 units.

Multiply 5 X 100 = 500
So TVC = $500

3. Average fixed Cost = the fixed cost per unit of output.

Relying on these first two questions,
total cost = $800.

Total cost - total variable cost = total fixed cost

800 - 500 = 300

TFC = 300. However, we're finding the average (per unit)
In total, there are 100 units.
Therefore, the fixed cost for 1 unit of output = 300/100 = 3
AFC = $3

4. Average Total Cost = total cost / quantity produced.

Total cost = $800
quantity produced = $100

800 / 100 = 8

so average total cost = $8



~ I would recheck the MC, as I'm not entirely sure that I'm right there; however, I would not know what to do otherwise.

Hope this helps!