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Author Question: Assume that you have data on a firm's average fixed cost and average variable cost for various ... (Read 120 times)

awywial

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on: Jun 29, 2018
Assume that you have data on a firm's average fixed cost and average variable cost for various levels of output and you are asked to calculate the total variable cost and total cost of the firm.
 
  Would this be enough information to perform this calculation? Explain

Question 2

Refer to Scenario 1 . If you start the course in such a way that each exam score is worse than your previous average what should happen to your average score? What would happen to your average if the next exam score was larger than your previous exam
 
  score? Explain.


shailee

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Reply #1 on: Jun 29, 2018
Answer to Question 1

This would be enough information. Total variable cost can be can be calculated by taking the average variable cost and multiplying times the output level. Total fixed costs can be derived by taking the average fixed costs and multiplying it times the level of output. The total cost of the firm is simply the sum of both of these figures.

Answer to Question 2

Your average would continue to fall. If you received a score on one examination that was higher than the previous exam score there wouldn't be any way to determine what would happen to your average unless you knew what this score was compared to your previous average, not your previous exam score.


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