Quantity Total Cost Q Variable Marginal Cost Marginal Cost Cost MC MC VC (calculated (calculated using…
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Question “Quantity Total Cost Q Variable Marginal Cost Marginal Cost Cost MC MC VC (calculated (calculated using…”
Answer
Q | TC | VC | MC = (Change in the TC) | MC=(Changes in VC) |
0 | 300 | 0 | – | – |
1 | 350 | 50 | 50 | 50 |
2 | 390 | 90 | 40 | 40 |
3 | 420 | 120 | 30 | 30 |
4 | 450 | 150 | 30 | 30 |
5 | 490 | 190 | 40 | 40 |
6 | 540 | 240 | 50 | 50 |
Pizzeri’s fixed costs = TC-VC = $ (300-0)= $300.
Hence, option(B) is correct.
Marginal cost does not differ whether it is calculated using total cost or variable costs. Variable cost captures the change in production cost. This is because fixed costs do not change with output changes. Hence, option(A) is correct.
Conclusion
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