Question

Calculate TVC and MC at each given level of output.

Outputs (Units)	0	1	2	3	4
Total cost (₹)	40	60	78	97	124

Answer 1

Given: 

Outputs (Units)	0	1	2	3	4
Total cost (₹)	40	60	78	97	124

Step 1: Total Fixed Cost (TFC)

TFC = Total Cost when output = 0 = ₹40 (this remains constant)

Step 2: Total Variable Cost (TVC)

TVC = TC − TFC

Output	TC	TVC = TC − 40
0	40	–
1	60	20
2	78	38
3	97	57
4	124	84

Step 3: Marginal Cost (MC)

MC = Change in TC / Change in Output

From Q	To Q	MC = ΔTC
0 → 1		60 − 40 = 20
1 → 2		78 − 60 = 18
2 → 3		97 − 78 = 19
3 → 4		124 − 97 = 27

TVC = –, ₹ 20, ₹ 38, ₹ 57, ₹ 84

MC = –, ₹ 20, ₹ 18, ₹ 19, ₹ 27