You are the operations manager of a precious gem retailer. Your gems are sold in a competitive market. Your job as manager is to determine the optimal quantity of gems to sell each month based on the current price gems sell for as well as the cost of gem acquisition and labor costs.

Please explain how to fill in the table below for the empty columns by showing the calculations and formulas (fixed costs-FC ; variable cost-VC ; average total costs- ATC; Average Variable cost- AVC and Marginal costs-MC).

Total Cost (TC) The overall cost of production; includes variable and fixed costs

Fixed Cost (FC) The cost component that does not vary with output.Can be found by calculating the cost of Q=0

Variable Cost (VC) The cost component that depends on the output level; the remaining cost after subtracting FC

Average Total Cost (ATC) The total cost (TC) divided by the quantity of output

Average Variable Cost (AVC) The variable cost (VC) divided by the quantity of output

Marginal Cost (MC) The change in total cost (or variable cost) from producing one more unit of output.Can be found by taking the total cost at "Q" and subtracting the total cost of "Q-1" units.

Use the info below to determine the profit-maximizing output level of your firm.

Upkeep: 7,500 (fixed cost parameter)

Employee Salary: 100 (wage parameter)

Cost of Acquisition: 5 (variable cost parameter)

Quantity of

Gemstones

(Carats per month) Total Cost FC VC ATC AVC MC

0 $7,500 $7,500 $5 - - -

1 $7,605

2 $7,720

3 $7,845

4 $7,980

5 $8,125