Please show your work. CHAPTER 12 12.1) Sarah works as a hairdresser in Wolfvill
ID: 1124508 • Letter: P
Question
Please show your work. CHAPTER 12 12.1) Sarah works as a hairdresser in Wolfville in a perfectly competitive market. Sarah's total cost at various levels of output (number of haircuts) is provided in the table below. Output Total Cost MC TVc AVc (haircuts) (dollars) dollars) dollars) (dollars) dollars) ATC NA $20 NA $36 $44 $501 $72 $92 NA 10 12 $116 a) Calculate Sarah's marginal cost (MC) at each output interval (2, 4, 6, etc.) and fill the third column in the table above b) Calculate Sarah's total variable cost (TVC) at each output interval (2, 4, 6, etc.) and fill the fourth column in the table above. (Hint: You should figure out her fixed cost first) c) Calculate Sarah's average variable cost (AVC) at each output interval (2, 4, 6, etc.) and d) Calculate Sarah's average total cost (ATC) at each output interval (2, 4, 6, etc.) and fill fill the fifth column in the table above. the last column in the table aboveExplanation / Answer
Ans:
Total cost when output is zero is $20. Hence, fixed cost = $20.
Marginal cost is the additional cost for producing the additional units of output.for example, marginal cost for first 2 units of output is $16 .i.e($36-$20) and marginal cost for next 2 units of output is $8 .i.e($44-$36).
Total Variable cost = Total cost - Fixed cost
Average variable cost = Total variable cost / output
Average total cost = Total cost / output
Output Total cost($) MC($) TVC($) AVC($) ATC($) 0 $20 NA 0 NA NA 2 $36 $16 $16 $8 $18 4 $44 $8 $24 $6 $11 6 $56 $12 $36 $6 $9.3 8 $72 $6 $52 $6.5 $9 10 $92 $10 $72 $7.2 $9.2 12 $116 $24 $96 $8 $9.67