Answer the following questions based on the given table. [3×2+2=8] Output TFC TVC TC AC MC : : : : : : : : : : : : 0 50 0 50 1 50 10 2 50 16 3 50 20 4 50 26 5 50 35 6 50 55 7 50 90 8 50 150 Complete…

Completed Table

The given table contains Total Fixed Cost (TFC), Total Variable Cost (TVC), and Output values. We need to calculate Total Cost (TC), Average Cost (AC), and Marginal Cost (MC).

Step 1: Calculate Total Cost (TC)

$$TC=TFC+TVC$$

Step 2: Calculate Average Cost (AC)

$$AC=\frac{TC}{Output}$$

Step 3: Calculate Marginal Cost (MC)

$$MC=\Delta TC=T{C}_n-T{C}_{n-1}$$

Final Completed Table

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Average and Marginal Cost Curves

Based on the completed table, the Average Cost (AC) and Marginal Cost (MC) curves can be plotted as follows:

Key Observations from the Graph:

1. AC Curve:
   • Starts high at Output = 1 (Rs. 60).
   • Decreases until Output = 5 (minimum AC = Rs. 17).
   • Increases after Output = 5 due to diminishing returns.

2. MC Curve:
   • Initially decreases (from Rs. 10 to Rs. 4).
   • Then increases sharply after Output = 5 (due to rising variable costs).
   • MC intersects AC at its minimum point (Output = 5, AC = Rs. 17).

This confirms the law of variable proportions, where initially, marginal cost decreases, reaches a minimum, and then rises sharply as more variable inputs are used. The AC curve follows a U-shape, which is typical in the short run.