Q.Given the following Total Cost schedule of a firm: Q = 0, TC = 50; Q = 1, TC = 90; Q = 2, TC = 120; Q = 3, TC = 140; Q = 4, TC = 170; Q = 5, TC = 220. Compute the Marginal Cost at each output level from 1 to 5, and identify the firm's Total Fixed Cost.

The cost of producing one additional unit of output is called Marginal Cost, so the answer is option (a).

Marginal Cost (MC) is the addition to total cost caused by producing one more unit of output:

Marginal Cost = Change in Total Cost / Change in Output = (TCn − TCn-1)

It reflects only the change brought about by the last unit produced. In contrast:

• Fixed cost does not change with output.
• Variable cost changes with output but is the total (not per extra unit) variable expense. …

The correct option is (d) 1,200: TC = TFC + TVC = 1,000 + 200 = 1,200.

In the short run a firm's total cost (TC) is the sum of two parts: total fixed cost (TFC), which does not change with output, and total variable cost (TVC), which changes with output. The relationship is TC = TFC + TVC.

Substituting the given figures:

TC = 1,000 + 200 = 1,200.

…

The cost of producing one more unit of output is marginal cost.

Marginal cost (MC) is defined as the addition made to total cost when output is increased by one unit: MC = change in TC / change in Q. Variable cost changes with output but refers to the total of all variable inputs, not the cost of a single extra unit. Total cost is the sum of fixed and varia …

Average cost = Total Cost / Quantity, i.e. TC/Q.

Average cost (AC), also called average total cost, is the cost per unit of output. It is calculated by dividing the total cost by the number of units produced: AC = TC / Q. It can also be seen as the sum of average fixed cost (AFC = TFC/Q) and average variable …