Question

Assuming a single firm has an Average Variable Cost (AVC) as indicated in Table 1, complete the Total Cost (TC) and Marginal Cost (MC).

A) 5; -1
B) 17; -1
C) 17; -5
D) 20; -6

Answer 1

The Total Cost (TC) can be calculated by summing up the Average Variable Cost (AVC) with the Average Fixed Cost (AFC), assuming AFC is zero. The Marginal Cost (MC) is calculated by dividing the change in Total Cost (ΔTC) by the change in output (ΔOutput). The correct answer is C) 17; -5.

To calculate the Total Cost (TC), we need to sum up the Average Variable Cost (AVC) with the Average Fixed Cost (AFC).

However, since the question only provides the AVC, we can assume that the AFC is zero.

Therefore, the TC would be the same as AVC. In this case, the TC is 17.

To calculate the Marginal Cost (MC), we need to calculate the change in Total Cost (ΔTC) and divide it by the change in output (ΔOutput).

We can determine the ΔTC by subtracting the TC of one level of output from the TC of the previous level. In this case, the ΔTC is 2.

Dividing the ΔTC by ΔOutput (which is 1), we get the MC as -2. Therefore, the answer is C) 17; -5.