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Subject: Macroeconomics

Course: ECON 2180

A table has been (partially) constructed on the attached page to illustrate how costs are linked to production. The table assumes that labor is paid $10/hour with total costs of labor shown in the third column. In addition, we are assuming that there is another variable input, materials, in addition to labor; the amount of these materials vary on the basis of the output and cost $20 per unit of output. The fourth column of the table show the total costs of material. Together labor and materials constitute the variable inputs in the production process. We are assuming that there is also a fixed input being used in the production process.That fixed cost (which does not depend on the level of output and which must be paid even if there is no output) is shown in column 7 of the table and is shown to be equal to $6,000.

You are to fill in the remaining columns of the table ('formulae' are suggested in the top row.

(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)
Output (Q)	Labor (L)	Labor Cost ($)	Material Cost ($)	Total Variable Cost (TVC)	Avg. V'ble Cost (AVC) AVC = TVC / Q	Total Fixed Cost (TFC)	Avg Fixed Cost (AFC) AFC = TFC / Q	Total Costs (TC) TC = TVC + TFC	Avg Total Cost (ATC) ATC = TC / Q	Marginal Costs (MC) MC = TC / Q
0	0	$0	$0	$		$6,000
35	100	1,000	700			6,000
150	200	2,000	3,000			6,000
210	300	3,000	4,200			6,000
250	400	4,000	5,000			6,000
270	500	5,000	5,400			6,000
288	600	6,000	5,760			6,000
305	700	7,000	6,100			6,000
315	800	8,000	6,300			6,000