question_answer

A firm's fixed cost is Rs. 2,000.Compute Total Variable Cost (TVC), Average Variable Cost (AVC), Total Cost (TC) and Average Cost (AC) with the help of the following table.  

Output(Units)	1	2	3	4	5	6	7
Marginal Cost (MC)(Rs.)	2,000	1,500	1,200	1,500	2,000	2,700	3,500

Answer:

            Cost Schedule

Output (Q)		MC	TFC	TVC	TC	AVC	AC
1		2,000	2,000	2,000	4,000	2,000	4,000
2		1,500	2,000	3,500	3,500	1,750	2,750
3		1,200	2,000	4,700	4,700	1,567	2,233
4		1,500	2,000	6,200	6,200	1,550	2,050
5		2,000	2,000	8,200	8,200	1,640	2,040
6		2,700	2,000	10,900	10,900	1,817	2,150
7		3,500	2,000	14,400	16,400	2,057	2,343

Formulae used TVC=\[\Sigma MC\] AVC = TVC / units of output TC = TFC+TVC AC = TC / units of output