Quantity Total Cost Average Total Cost Marginal Cost Total Variable
Cost Average Variable Cost
1 510 510.00 10 10 10
2 520 260.00 20 20 10
3 530 176.67 30 30 10
4 540 135.00 40 40 10
5 550 110.00 50 50 10
6 560 93.33 60 60 10
7 570 81.43 70 70 10
8 580 72.50 80 80 10
9 590 65.56 90 90 10
10 600 60.00 100 100 10
Marginal cost is the only variable cost present, so that is why
marginal cost and total variable cost are the same.
The breakeven quantity if the price is $100 each is 6 (Revenue equal
$600, Total Cost equals $560, profit equals $40).
As larger numbers of units are produced, the elasticity of cost with
respect to output approaches one. This is because the fixed cost per
unit approaches zero as the number of units increases, resulting in a
linear relationship between total cost and quantity produced.
Elasticity is computed by the formula Delta Q/(Q1 + Q2)/2/Delta
TC/(TC1 + TC2). Elasticity is defined as the percentage change in
Total Cost for every 1% change in output quantity.
The elasticity of cost between the production of 1 unit and 2 units is
34.33. The elasticity of cost between the production of 9 units and
10 units is 6.26. The elasticity of cost between the production of
9,999 units and 10,000 units is 1.05. The elasticity of cost between
the production of 999,999 and one million units is 1.00005.
Sincerely,
Wonko |
