Suppose that a firm-s total fixed cost is Rs- 100 - and the marginal cost schedule of a firm is the following -beginarray -c- c-c- c-c- c-c- c - Whineend array i Is the MC curve U-shaped -ii Derive the AVC schedule- Will the AVC curve U-shaped - Discuss-

[ Output amp; 1 amp; 2 amp; 3 amp; 4 amp; 5 amp; 6 amp; 7; MC amp; 10 amp; 20 amp; 30 amp; 40 amp; 50 amp; 60 amp; 70; TVC am ...

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Standard XI

Economics

Total, Average and Marginal Revenue

Suppose that ...

Question

Suppose that a firm's total fixed cost is Rs. 100, and the marginal cost schedule of a firm is the following :

$\begin{matrix} Output (in units) & 1 & 2 & 3 & 4 & 5 & 6 & 7 Marginal cost (in Rs) & 10 & 20 & 30 & 40 & 50 & 60 & 70 \end{matrix}$

(i) Is the MC curve U-shaped ?

(ii) Derive the AVC schedule. Will the AVC curve U-shaped ? Discuss.

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Solution

$\begin{matrix} Output & 1 & 2 & 3 & 4 & 5 & 6 & 7 MC & 10 & 20 & 30 & 40 & 50 & 60 & 70 TVC & 10 & 30 & 60 & 100 & 150 & 210 & 280 AVC & 10 & 15 & 20 & 25 & 30 & 35 & 40 \end{matrix}$

The MC curve is not U-shaped. As the slope of the MC curve is constant, and equal to 10, the MC curve is an upward-sloping straight line through the origin.

The AVC curve is also not U-shaped. It is an increasing curve. This is because MC is rising throughout, and this increase in MC is translated solely to an increase in AVC.

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Similar questions

A firm's SMC schedule is shown in the following table. The total fixed cost of the firm is Rs. 100. Find the TVC, TC, AVC and SAC schedules of the firm.

$\begin{matrix} Q & 0 & 1 & 2 & 3 & 4 & 5 & 6 S M C & 500 & 300 & 200 & 300 & 500 & 800 \end{matrix}$

Q. A firm's SMC schedule is shown in the following table. The total fixed cost of the firm is Rs. 100. Find the TVC, TC, AVC and SAC schedules of the firm.

Q	0	1	2	3	4	5	6
SMC	-	500	300	200	300	500	800

A firm’s SMC schedule is shown in the following table. The total fixed cost of the firm is Rs 100. Find the TVC, TC, AVC and SAC schedules of the firm.

L	TP_L
0	−
1	500
2	300
3	200
4	300
5	500
6	800

Draw average total cost, average variable cost, and marginal cost curves in a single diagram. Also, explain the relationship between ATC and AVC.

Explain the relation between (i) ATC and AVC and (ii) MC and AVC.

Q. The following table shows the total cost schedule of a firm. What is the total fixed cost schedule of this firm? Calculate the TVC, AFC, AVC, SAC and SMC schedules of the firm.

Q	0	1	2	3	4	5	6
TC	10	30	45	55	70	90	120

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Suppose that a firm's total fixed cost is Rs. 100, and the marginal cost schedule of a firm is the following : Output (in units)1234567Marginal cost (in Rs)10203040506070 (i) Is the MC curve U-shaped ? (ii) Derive the AVC schedule. Will the AVC curve U-shaped ? Discuss.