Question

2. The table below shows clothing manufacturer's total cost of producing cloths. (9 points) Q TC (in millions) TVC AVC 0 $50 1 54 2 56 3 57 4 59 5 62 6 66 7 72 8 80 9 92 10 110 AFC ATC MC a. What is this manufacturer's fixed cost? b. For each level of output, calculate the total variable cost (VC), average variable cost (AVC), the average total cost (ATC), the average fixed cost (AFC), and the marginal cost (MC). c. What is the efficient capacity? If there is any. d. In one diagram, draw the manufacturer's AVC, ATC, and MC curves.​

Answer 1

a. the manufacturer's fixed cost is $0.

b. sorry I don't know

c. 5 units.

d. The AVC curve is U-shaped, with a minimum point at around 3 units of output. The ATC curve is also U-shaped, with a minimum point at around 5 units of output.

Explanation:

a. The fixed cost (FC) can be calculated by subtracting the total variable cost (TVC) from the total cost (TC) when output is 0.

FC = TC - TVC

Given that TC is $50 when output is 0 and TVC is not provided, we can assume that TVC is also $50 when output is 0 (since there are no variable costs at 0 output).

FC = $50 - $50

FC = $0

Therefore, the manufacturer's fixed cost is $0.

c. The efficient capacity refers to the level of output where the average total cost (ATC) is at its minimum. From the given data, we can see that the ATC is at its minimum when the output is 5 units, with an ATC of $12.4 million.

Therefore, the efficient capacity for this manufacturer is 5 units.

d. The AVC curve is U-shaped, with a minimum point at around 3 units of output. The ATC curve is also U-shaped, with a minimum point at around 5 units of output.