ECO 114 – Cost Calculations

Labour TPP MPP APP TC TVC TFC MC ATC AVC AFC

1 200 200 200 750 500 (a) 1.08 (b) (c ) (d)
2 350 150 (e ) (f) 600 (g) 0.67 (h) (i) (k)
5 (l) 50 90 (n) (o) 250 (q) 1.9 1.4 0.5

a) TC= TVC + TFC

750 = 500 + TFC
TFC = 750-500
TFC = 250

However, remember that TFC remains the same. It does not change.
This means that a=p=g=250

b) ATC = TC / Q = 750/200 = 3.75

c) AVC = TVC / Q = 500/200 = 2.5

d) AFC = TFC / Q = 250 / 200 =1.25

e) APP= TPP/ Q = 350/2 = 175

f) TC = TVC + TFC = 600+250 = 850

g) 250 (as per answer for (a))

h) ATC = TFC / Q = 850/350 = 2.43

i) AVC = TVC / Q = 600/350 = 1.71

k) AFC = TFC/ Q = 250/350 =0.714

l) MPP = ΔTPP / Δ Q

50= TPP – 350 / 5-2

50 = TPP – 350 / 3

50 x 3 = TPP – 350
150 = TPP – 350
TPP = 150 + 350
TPP = 450
Labour TPP MPP APP TC TVC TFC MC ATC AVC AFC
1 200 200 200 750 500 (a) 1.08 (b) (c ) (d)
2 350 150 (e ) (f) 600 (g) 0.67 (h) (i) (k)
5 (l) 50 90 (n) (o) 250 (q) 1.9 1.4 0.5

n) ATC = TC / Q
1.9 = TC / 450
TC = 450 x 1.9
TC = 855

o) TC = TVC + TFC
855 = TVC + 250
TVC = 855 -250 = 605

q) MC = ΔTC / ΔQ
MC = 855-850 / 450-350 = 5/100 = 0.05