PROBLEM SOLVING 1: "ANDREA'S SOFTWARE BUSINESS"
I. Complete the following table: DO THE MATH
Data
Number of Programs Total Fixed Costs Total Variable Costs Total Costs Marginal Costs Average Fixed Costs Average Variable Costs Average Total Costs
0 $60 $0 $60 ----- ----- ----- -----
1 $60 $45 $105 $45 $60 $45 $105
2 $60 $85 $145 $40 $30 $ $70
3 $60 $120 $180 $ $20 $40 $60
4 $60 $60 $120 $ $15 $15 $30
5 $60 185 $245 $ $12 $37 $49
6 $60 $225 $285 $ $10 $37.50 $47.50
7 $60 270 $330 $45 $8.57 $ $
8 $60 $325 $385 $ $7.5 $40.625 $48.125
9 $60 $390 $450 $ $6.66 $43.33 $50
10 $60 465 $525 $ $6 $46.50 $52.50
This is false....
Econ will help you for life!
To complete the table, we need to fill in the missing values for Marginal Costs, Average Variable Costs, and Average Total Costs.
II. Marginal Costs:
To calculate the Marginal Costs, we need to find the change in Total Costs when the number of programs increases by one.
- For data point 1, the Marginal Costs is equal to the Total Variable Costs of $45.
- For data point 2, the Marginal Costs is the change in Total Costs from data point 1 to data point 2, which is $145 - $105 = $40.
- Similarly, we can calculate the Marginal Costs for the rest of the data points.
III. Average Variable Costs:
To calculate the Average Variable Costs, we divide the Total Variable Costs by the Number of Programs.
- For data point 1, the Average Variable Costs is $45 divided by 1 equals $45.
- For data point 2, the Average Variable Costs is $85 divided by 2 equals $42.50.
- Similarly, we can calculate the Average Variable Costs for the rest of the data points.
IV. Average Total Costs:
To calculate the Average Total Costs, we divide the Total Costs by the Number of Programs.
- For data point 1, the Average Total Costs is $105 divided by 1 equals $105.
- For data point 2, the Average Total Costs is $145 divided by 2 equals $72.50.
- Similarly, we can calculate the Average Total Costs for the rest of the data points.
Using this information, we can now complete the table.
Data Number of Programs Total Fixed Costs Total Variable Costs Total Costs Marginal Costs Average Fixed Costs Average Variable Costs Average Total Costs
0 $60 $0 $60 ----- ----- ----- -----
1 $60 $45 $105 $45 $60 $45 $105
2 $60 $85 $145 $40 $30 $42.50 $72.50
3 $60 $120 $180 $35 $20 $40 $60
4 $60 $60 $120 $30 $15 $15 $30
5 $60 $185 $245 $25 $12 $37 $49
6 $60 $225 $285 $40 $10 $37.50 $47.50
7 $60 $270 $330 $45 $8.57 $38.57 $47.14
8 $60 $325 $385 $55 $7.50 $40.60 $48.13
9 $60 $390 $450 $65 $6.66 $43.33 $50
10 $60 $465 $525 $75 $6 $46.50 $52.50
To complete the table, we need to calculate the missing values using the given data.
1. Total Fixed Costs: These costs remain constant regardless of the number of programs produced. Therefore, the value is $60 for all rows.
2. Total Variable Costs: These costs increase as the number of programs produced increases. We can calculate total variable costs for each row by subtracting the previous row's total variable costs from the current row's total costs.
For example, for the first row, the total variable costs are $0 since there are no programs. For the second row, the total costs are $105, and the total variable costs are $105 - $60 = $45.
Similarly, we can calculate the total variable costs for each row in the table.
3. Total Costs: These costs are the sum of total fixed costs and total variable costs.
For example, for the second row, the total costs are $60 + $45 = $105.
4. Marginal Costs: These costs represent the additional cost incurred by producing one more program. To calculate the marginal costs, we need to find the difference between the total costs of the current row and the previous row.
For example, for the second row, the marginal costs are $105 - $60 = $45.
We can calculate the marginal costs for each row using the same approach.
5. Average Fixed Costs: These costs are obtained by dividing the total fixed costs by the number of programs.
For example, for the second row, the average fixed costs are $60 / 1 = $60.
We can calculate the average fixed costs for each row using the same formula.
6. Average Variable Costs: These costs are obtained by dividing the total variable costs by the number of programs.
For example, for the second row, the average variable costs are $45 / 1 = $45.
We can calculate the average variable costs for each row using the same formula.
7. Average Total Costs: These costs are obtained by dividing the total costs by the number of programs.
For example, for the second row, the average total costs are $105 / 1 = $105.
We can calculate the average total costs for each row using the same formula.
By following these steps, we can complete the remaining values in the table.