Question

A firms’ average fixed cost of producing 2 units of a good is Rs. 9 and given below is its total cost schedule. Calculate its Average variable cost and marginal cost for each of the given level of output.

| Output | 1 | 2 | 3 |
| TC (Rs.) | 23 | 27 | 30 |

Answer 1

TFC = AFC × No. of Units of output

= 9 × 2 = 18

| Output Q Units | TC Rs | TFC Rs. | TVC Rs | AVC Rs. | MC Rs. |
| 1 | 23 | 18 | 5 | 5 | 5 |
| 2 | 27 | 18 | 9 | 4.50 | 4 |
| 3 | 30 | 18 | 12 | 4 | 3 |