To the $55 of fixed cost in Table 7-3, add $90 of additional FC. Now calculate a whole new table, with the same VC as before but new FC = $145. 

What happens to MC, AVC? To TC, AC, AFC? 

Can you verify that minimum AC is now at q* = 5 with AC = $60 = MC?

  Table 7-3  

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(7) Average fixed (1) (2) (3) (4) (5) (6) (8) Average variable cost Marginal cost per unit MC Average cost per unit AC = TC/q ($) cost per unit AVC = VClq ($) Fixed cost Variable cost Total cost TC = FC + VC ($) per unit AFC = FClq Quantity FC VC ($) ($) ($) 55 55 Infinity Infinity Undefined 30 1 55 85 85 55 30 25 2 55 110 55 272 3 55 75 130 43% 18% 25 30 4* 55 105 160 40* 40* 13% 264 50 55 155 210 42 11 -70 55 225 280 46% 9% 372 *Minimum level of average cost. TABLE 7-3. All Cost Concepts Derive from Total Cost Schedule (7) Average fixed (1) (2) (3) (4) (5) (6) (8) Average variable cost Marginal cost per unit MC Average cost per unit AC = TC/q ($) cost per unit AVC = VClq ($) Fixed cost Variable cost Total cost TC = FC + VC ($) per unit AFC = FClq Quantity FC VC ($) ($) ($) 55 55 Infinity Infinity Undefined 30 1 55 85 85 55 30 25 2 55 110 55 272 3 55 75 130 43% 18% 25 30 4* 55 105 160 40* 40* 13% 264 50 55 155 210 42 11 -70 55 225 280 46% 9% 372 *Minimum level of average cost. TABLE 7-3. All Cost Concepts Derive from Total Cost Schedule

Answer rating: 100% (QA)

The new table with FC145 is given as follows q FC VC TCFCVC MC ACTCq AFCFCq AVCVCq 0 145 0 145 Infin... View the full answer