Question

Calculate the ATC and MC from the following cost schedule of a firm, when its TC is ₹ 60.

Output (Units)	1	2	3
Average variable cost (₹)	20	25	24

Answer 1

Given:

Output (Units)	1	2	3
Average variable cost (₹)	20	25	24

Step 1: Find Total Variable Cost (TVC)

Multiply AVC by output:

• TVC at 1 unit = 20 × 1 = ₹ 20
• TVC at 2 units = 25 × 2 = ₹ 50
• TVC at 3 units = 24 × 3 = ₹ 72

Step 2: Find Total Cost (TC)

Add TFC to TVC:

• TC at 1 unit = 60 + 20 = ₹ 80
• TC at 2 units = 60 + 50 = ₹ 110
• TC at 3 units = 60 + 72 = ₹ 132

Step 3: Find Average Total Cost (ATC)

Divide TC by output:

• ATC at 1 unit = 80 ÷ 1 = ₹ 80
• ATC at 2 units = 110 ÷ 2 = ₹ 55
• ATC at 3 units = 132 ÷ 3 = ₹ 44

Step 4: Find Marginal Cost (MC)

Find the change in TC:

• MC from 1 to 2 units = 110 − 80 = ₹ 30
• MC from 2 to 3 units = 132 − 110 = ₹ 22

Output	AVC	ATC	MC
1	20	80	–
2	25	55	30
3	24	44	22