The cost structure of a manufacturer of microchips is descri

The cost structure of a manufacturer of microchips is described in the table shown below The firm\'s fixed costs equal $20,000 per day. Calculate the average variable cost, average fixed cost, and average total cost at each output level. (Your answers should be rounded to the nearest cent.) Output (microchips per day) Total Cost of Output $20,000 70,000 105,000 160,000 230,000 335,000 475,000 Average Variable Cost ($) Average Fixed Cost (S) Average Total Cost ($) 35,000 60,000 85,000 110,000 135,000 160,000

Solution

Output (Q) TC ($) TFC ($) TVC($) = TC-TFC AVC($) = TVC/Q AFC($) = TFC/Q ATC($) = TC/Q 0 20000 20000 - - - - 35000 70000 20000 50000 1.43 0.57 2.00 60000 105000 20000 85000 1.42 0.33 1.75 85000 160000 20000 140000 1.65 0.24 1.88 110000 230000 20000 210000 1.91 0.18 2.09 135000 335000 20000 315000 2.33 0.15 2.48 160000 475000 20000 455000 2.84 0.13 2.97