Eco 550 Assignment 1

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Strayer University
ECO550 – Managerial Economics and Globalization

Assignment 1

K| L| TP (Q)| TFC| TVC| TC| AFC| AVC| ATC| MC|
10| 0| 0| $600| $0| $600|  |  |  |  |
10| 1| 14| $600| $100| $700| $42.86| $7.14| $50| $7.14| 10| 2| 33| $600| $200| $800| $18.18| $6.06| $24| $5.26| 10| 3| 57| $600| $300| $900| $10.53| $5.26| $16| $4.17| 10| 4| 83| $600| $400| $1,000| $7.23| $4.82| $12| $3.85| 10| 5| 108| $600| $500| $1,100| $5.56| $4.63| $10| $4.00| 10| 6| 132| $600| $600| $1,200| $4.55| $4.55| $9| $4.17| 10| 7| 152| $600| $700| $1,300| $3.95| $4.61| $9| $5.00| 10| 8| 165| $600| $800| $1,400| $3.64| $4.85| $8| $7.69| 10| 9| 171| $600| $900| $1,500| $3.51| $5.26| $9| $16.67| 10| 10| 167| $600| $1,000| $1,600| $3.59| $5.99| $10| -$25.00|

Figure 1: Total Cost (TC), Total Variable Cost (TVC) and Total Fixed Cost (TFC) functions

Figure 2: Marginal Cost (MC), Average Total Cost (ATC), Average Variable Cost (AVC) and Average Fixed Cost (AFC) functions

Please see the Excel sheet attachment for more details

Equation used in this assignment:
Cost function| Equation|
Total Fixed Cost (TFC)| Given as $600|
Total Variable Cost (TVC)| Given and increasing from $0, $100, $200…to $1000| Total Cost (TC)| TFC + TVC|
Average Fixed Cost (AFC)| TFC/Q|
Average Variable Cost (AVC)| TVC/Q|
Average Total Cost (ATC)| AFC + AVC|
Marginal Cost (MC)| ∆TC/∆Q|

Total Fixed Cost (TVC): in economics, fixed cost is business expenses that are not dependent on the level of goods or services produced by the business. They tend to be time-related, such as salaries or rents bring paid per month and often referred to as overhead costs. For that, TVC is the cost of using the fixed input, in this assignment we put in $600 as the price per unit of capital times the quantity of capital. In Figure 1 as you can see, a horizontal...
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