Problem set on Production Costs

Exercise 3 on Production Costs 1. A producer of hard disk drives for notebook computers currently has a factory with 2 disk pressing machines, which it cannot change in the short run. Each of the machine costs P100/day (the opportunity cost of the funds used to buy them). Each hired worker casts P50/day. The relationship between output and the number of workers is as follows: Output Labor Total Total Total Ave. Ave. Ave. Marginal level units (1) fixed variable Cost fixed variable Total Cost (Q) costs costs (TC) cost cost Cost (MC) (TFC (TVC) (AFC) (AVC) (ATC) 10 15 18 S $6 48 a) Fill the columns for total fixed cost (TFC), total variable cost (TVC), total cost (TC), average fixed cost (AFC), average variable cost (AVC), average total cost (ATC), and marginal cost (MC). Graph the TFC. TVC and TC. b) Show graphically that the intersection of the average variable cost (AVC) curve and the marginal cost Curve (MC) is the point of minimum average variable cost. Do the same for ATC and MC. Explain the two results