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# Calculating AVC, AFC, and ATC.. Help! [Economics]?

The cost structure of a manufacturer of microchips is described in the following table. The firm's fixed costs equal \$10 per day. Calculate the average variable cost, average fixed cost, and average total cost at each output level.

Output

Total Cost of

(microchips per day) Output (\$ thousands)

0 10

25 60

50 95

75 150

100 220

125 325

150 465

Update:

Please no direct answers, just the formulas (and an example) if possible. Thanks!

Relevance

The table includes total cost and dollar output. Since total cost includes both fixed and variable costs, you need to subtract fixed cost (\$10) from each cost figure in the table to get total variable cost.

From there, the formulas are:

AVC = TVC / output

AFC = TFC / output

ATC = TC / output (this is also equal to AVC plus AFC)

I'm not sure about your table. You are listing total cost in the left column, and output in the right column. Intuition tells me that this is backwards. Also, you list output in terms of thousands of dollars. You can only calculate these numbers if output is measured in units, not dollars.

I cannot give you an example of each based directly on your table, then, but here is an example based on numbers from that table, after I change the headings to something that I can calculate:

I will use the second item, and change it to read 25 units, total cost 60.

AVC = \$50 (TC minus TFC) / 25, or \$2

AFC = \$10 / 25, or \$0.40

ATC = \$60 / 25, or \$2.40

Notice that ATC is equal to AVC plus AFC.

• 4 years ago

Atc Economics

• Anonymous
6 years ago

RE:

Calculating AVC, AFC, and ATC.. Help! [Economics]?

The cost structure of a manufacturer of microchips is described in the following table. The firm&#39;s fixed costs equal \$10 per day. Calculate the average variable cost, average fixed cost, and average total cost at each output level.

Output

Total Cost of

(microchips per day) Output (\$...

Source(s): calculating avc afc atc economics: https://tr.im/YX3Pm
• 5 years ago

Average Total Cost Formula

• Anonymous