Following information is given about a firm.

$\begin{matrix} O u t p u t (U n i t s) & 0 & 1 & 2 & 3 & 4 & 5 & 6 T o t a l C o s t (R s .) & 400 & 550 & 660 & 790 & 940 & 1, 150 & 1, 460 \end{matrix}$

Find out
(i) the average fixed cost of producing 4 units.
(ii) the average variable cost of producing 5 units.
(iii) the least average cost level of output.
(iv) the marginal cost of producing the 3rd unit.
(v) the total variable cost of producing 6 units.

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Solution

$\begin{matrix} O u t p u t (U n i t s) & T C (R s .) & T F C (R s .) & T V C (R s .) & A F C (R s .) & A V C (R s .) & A C (R s .) & M C (R s .) 0 & 400 & 400 & 0 & \infty & 0 & \infty & - 1 & 550 & 400 & 150 & 400 & 150 & 550 & 150 2 & 660 & 400 & 260 & 200 & 130 & 330 & 110 3 & 790 & 400 & 390 & 133.33 & 130 & 263.33 & 130 4 & 940 & 400 & 540 & 100 & 135 & 235 & 150 5 & 1, 150 & 400 & 750 & 80 & 150 & 230 & 210 6 & 1, 460 & 400 & 1, 060 & 66.67 & 176.66 & 243.33 & 310 \end{matrix}$

(i) Average fixed cost of producing 4 units =Rs. 100.
(ii) Average variable cost of producing 5 units = Rs. 150.
(iii) The least average cost of level of output = 5 units.
(iv) Marginal cost of producing 3rd unit = Rs. 130.
(v) Total variable cost of producing 6 units = Rs. 1,060.

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