Consider a firm that has a fixed cost of $60 a minute.
output=1, Variable Cost= $10 what is the fixed cost?, Total Cost? Marginal cost?, AFC?, AVC? and ATC?
Output is 2?
Can't quite figue it out... thanks
micro economics - economyst, Monday, November 5, 2007 at 9:37am
I am confused by "$60 a minute". Could you mean fixed cost is simply $60.
Let me assume just that. Fixed cost=$60.
So, when output=1, then
total cost = 10+60=70,
marginal cost = 10,
When output=2, (assuming MC=10) then
Total cost = 20+60=80
MC = 10
AFC = 60/2 = 30
AVC = 20/2 = 10
ATC = 80/2 = 40