Question

Q41.Given below is the cost schedule of a firm .Its average fixed cost is RS 20 when it produces 3 units.

OUTPUT (UNIT) 1 2 3

AVERAGE VARIABLE COST 30 28 32

Calculate its marginal cost and average total cost at each given level of output.
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Answer 1

Explanation:

Since the fixed cost does not change with the output, the average fixed cost decreases as the output increases. The average variable cost does not always increase in proportion to an increase in the output. Marginal costs also come down until 44 units are produced after which they start rising.