Problem

Based on your answers to the WipeOut Skic company…

03:13

Problem 3 Medium Difficulty

The WipeOut Ski Company manufactures skis for beginners. Fixed costs are $\$ 30 .$ Fill in Table 7.16 for total cost, average variable cost, average total cost, and marginal cost.

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Principles of Microeconomics for AP® Courses

Chapter 7

Production, Costs and Industry Structure

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Video Transcript

okay. So heated were given a company that makes keys for beginners. The fixed cause. We're told her $30. So we have to fill out this table for a total cost average variable cost average, total cost on marginal cost. Let's start with total cost. An excel here will help us do this a lot quicker. Total cost is simply variable cause close fixed costs. So that's 30. We drag it down, we get that 10 plus start equals 40. So we can keep doing this for every single row here. And we would get, for example, that 70 posterity equals 100. The average variable cost is simply going to be the variable cost divided by the quantity. The 1st 1 will be blank because we can divide by zero. However, we can do variable cost divided by wanted to hear. We get 10 and similarly for the rest of them, right. For example, 45 divided by three will be 15. If we do this row 100 divided by five will be 20. Similarly, for average total costs again, we can divide by zero. But total cars divided by quantity will give us the average total cost and again. Same thing happens for these numbers. Train 75 divided by four equals 25. 100 divided by four equals 25 now marginal cost. See, we have to be careful here because marginal cost is one of the difference in total cost over the difference in quantity. It just so happens that the difference in quantity is going to be equal to one, because wanted he hears going, but once, right? 123456 So this is going to be equivalent to the change in total cause. So this let me put parentheses this minus this invited by that change, and we want to get burnt. Thinks he's here too. The change in quantity. So this is a marginal cost. Total costs increased by 15 and we drag it down. And so these are our numbers. Right? So here, total costs increased bye in the 1st 1 should be 10. Right? Because total cost went from 30 to 40 increased by 10. Increased by 15 increased by 20 increased by 25. Increased by 8 30 and then increase by 35. This is like to be there. This is actually supposed to be this way. Okay, Now, again, we can only do this right. That marginal cost is gonna be the changes in cost because quantity is increasing by one. And you cannot forget this. If this was not increasing by one than these numbers would not be the same as just the difference in total cost.

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