To fill in the remaining entries of the cost table, we need to understand the relationships between the different costs.
1. Total cost (TC): This is the sum of all costs incurred by the firm, including both fixed costs (FC) and variable costs (VC). As the number of laptops produced increases, the total cost also increases.
2. Variable cost (VC): This is the cost that varies with the level of production. It includes expenses such as the cost of materials and labor. As more laptops are produced, the variable cost also increases.
3. Average total cost (ATC): This is the total cost per unit of output. It is calculated by dividing the total cost by the number of laptops produced. As the number of laptops produced increases, the average total cost generally decreases due to economies of scale.
4. Average variable cost (AVC): This is the variable cost per unit of output. It is calculated by dividing the variable cost by the number of laptops produced. Similar to the average total cost, the average variable cost generally decreases as the number of laptops produced increases.
5. Marginal cost (MC): This is the additional cost incurred by producing one additional unit of output. It is calculated by taking the difference in total cost between two consecutive levels of production. The marginal cost can vary depending on various factors such as economies of scale, input prices, and production technology.
Now, let's fill in the missing entries in the cost table:
# of laptops | Total cost | Variable cost | Average total cost (ATC) | Average variable cost (AVC) | Marginal cost (MC)
0 | 1000 | - | - | - | -
1 | - | - | - | - | 120
2 | - | - | - | - | -
3 | - | - | - | - | -
4 | - | - | - | - | -
To complete the table, we would need more information or assumptions about the relationships between the costs for different levels of production. However, based on the information given, we can only determine that the marginal cost for producing the 1st laptop is 120.
Question 1: Firm Costs in Competitive Equilibrium
Tim runs a firm that makes laptops. Unfortunately, an intern spilled coffee over the following
cost table, leaving only a couple entries legible.
a. Fill in the table below based on your knowledge of the relationships between the
different costs.
# of laptops
0
1
2
3
4
st
5
Total cost
1000
Variable cost Average total Average
cost
160
180
variable cost
120
100
Marginal
Cost
120
1 answer