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)

$$MC=\Delta TVC=TV{C}_n-TV{C}_{n-1}$$

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Final Completed Table

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Average and Marginal Cost Curves

The Average Cost (AC) curve is U-shaped, initially falling and then rising. The Marginal Cost (MC) curve intersects the AC curve at its minimum point.

Key Observations:

1. AC curve is U-shaped, reaching its minimum at 5 units of output.
2. MC curve intersects AC curve at its lowest point, confirming the minimum AC.
3. MC rises sharply after 6 units, indicating diminishing returns in production.

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Explanation of the Graph

• The AC curve starts high at 60 NPR for 1 unit, decreases to 17 NPR at 5 units, and then rises again.
• The MC curve starts at 10 NPR, fluctuates, and then increases rapidly after 6 units.
• The intersection point of MC and AC occurs at 5 units, confirming the optimal production level where AC is minimized.