Question

Your company paid a corporate spy to find out the short-run cost of a competitor. The spy obtained the information below on your competitor's quantities, total variable cost, and total cost. An X appears in place of numbers the spy failed to get. Your boss asks you to calculate some of the information the spy was not able to obtain. Fill in the blanks below with the missing information.

Output Total Variable Total cost
0 $0 $250
25 450
50 300
75 375
100 600 850
125 1125
150 1200
175 1875
200 2000 2250

Answer 1

Output Total Variable Total cost

0 $0 $250

25 200 450

50 300 550

75 375 625

100 600 850

125 875 1125

150 1200 1450

175 1625 1875

200 2000 2250

Step-by-step explanation:

Note: The data in the question are merged together. They are therefor sorted before answering the question as follows:

Output Total Variable Total cost

0 $0 $250

25 450

50 300

75 375

100 600 850

125 1125

150 1200

175 1875

200 2000 2250

The explanation of the answer in now given as follows:

Since the Total Cost when the output is zero is equal to $250, that implies that the Total Fixed Cost is equal to $250. Also, since we have:

Total Cost = Total Total Variable + Total Fixed Cost ........ (1)

Where:

Total Fixed Cost = $250

Substituting Total Fixed Cost = $250 into equation (1), the two formulae to be used to fill the blanks are as follows:

Total Cost = Total Total Variable + $250 ...................... (2)

Total Total Variable = Total Cost - $250 ....................... (3)

Using equations (2) and (3) as applicable, the value for each of the blanks is calculated and filled (in bold italicized figures) and presented as follows:

Output Total Variable Total cost

0 $0 $250

25 200 450

50 300 550

75 375 625

100 600 850

125 875 1125

150 1200 1450

175 1625 1875

200 2000 2250