Question

explain average fixed cost, average variable cost anf total cost with the help of schedule diagram.​

Answer 1

Explanation:

Average fixed costs

Average fixed costs are found by dividing total fixed costs by output. As fixed cost is divided by an increasing output, average fixed costs will continue to fall.

OUTPUT TOTAL FIXED COST (£000) AVERAGE FIXED COST (£000)

1 100 100

2 100 50

3 100 33.3

4 100 25

5 100 20

6 100 16.6

7 100 14.3

8 100 12.5...

Average variable costs

Average variable costs are found by dividing total fixed variable costs by output.

OUTPUT TOTAL VARIABLE COST (£000) AVERAGE VARIABLE COST (£000)

1 50 50

2 80 40

3 100 33.3

4 110 27.5

5 150 30

6 220 36.7

7 350 50

8 640 80

Average total cost

Average total cost (ATC) is also called average cost or unit cost. Average total costs are a key cost in the theory of the firm because they indicate how efficiently scarce resources are being used. Average variable costs are found by dividing total fixed variable costs by output.

OUTPUT AVERAGE FIXED COST (£000) AVERAGE VARIABLE COST (£000) AVERAGE TOTAL COSTS (£000)

1 100 50 150

2 50 40 90

3 33.3 33.3 67

4 25 27.5 52.5

5 20 30 50

6 16.6 36.7 53.3

7 14.3 50 64.3

8 12.5 80 92.5

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Answer 2

It is defined as the variable cost per unit of output. Average Cost: It is defined as the total cost per unit of output. Average cost is derived by dividing total cost by quantity of output. AC is also defined as the sum total of average fixed cost and average variable cost.