question archive Various measures of cost Douglas Fur is a small manufacturer of fake-fur boots in Miami

Various measures of cost Douglas Fur is a small manufacturer of fake-fur boots in Miami

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Various measures of cost Douglas Fur is a small manufacturer of fake-fur boots in Miami. The following table shows the company's total cost of production at various production quantities.

Fill in the remaining cells of the following table.

Quantity Total Cost Marginal Cost Fixed Cost Variable Cost Average Variable Cost Average Total Cost (Pairs) (Dollars) (Dollars) Dollars)(Dollars) (Dollars per pair) (Dollars per pair)

0 120

1 210

2 270

3 315

4 380 

5 475

6 630

On the following graph, plot Douglas Fur's average total cost (ATC) curve using the green points (triangle symbol). Next, plot its average variable cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol). (Hint: For ATC and AVC, plot the points on the integer; for example, the ATC of producing one pair of boots is $210, so you should start your ATC curve by placing a green point at (1, 210). For MC, plot the points between the integers:

For example, the MC of increasing production from zero to one pair of boots is $90, so you should start your MC ve by placing an orange square at (0.5, 90).)

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Answer:

Q TC MC=Change in TC FC =TC when Q=0 VC = TC-FC AVC= VC/Q ATC= TC/Q
0 120 - 120 0 - -
1 210 90 120 90 90 210
2 270 60 120 150 75 135
3 315 45 120 195 65 105
4 380 65 120 260 65 95
5 475 95 120 355 71 95
6 630 155 120 510 85 105

By plotting these points we get ATC,AVC and MC curves as shown below:

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