I've been working on solving a table for the past hour or so, I'm completely lost as it appears the values aren't quite correct, this is what we've been given to solve:

total cost table

We've been given that the market price is $7/unit.

I attempted to solve for Variable Cost first, however when I proceeded to try to get ATC once I had this, it resulted in incorrect answers, here is what I had before (given in the previous picture is bolded in the following):

attempted solution of total cost table

I'm just not exactly sure where I am going wrong, any advice would be appreciated. I am not expecting answers, but at least a bit of guidance on whether I was going the right direction already, or where I made the mistake.

Thank you!


The first clue you should get is TC for Q = 1 is 8 (since ATC = 8). Then as MC for Q = 1 is 3, you know that TC for Q = 0 is 8-3 = 5, which is the same as fixed cost.


As you've said, each unit costs $7. Also, Total Cost= Variable Cost + Fixed Cost. Therefore, when Q=0 TC=0=VC (because the company does not produce any products). When Q=1 TC=7 and so on. Seeing your second table, you could easily calculate every TC in every production state by using TC=FC+VC. Now, if your second table is wrong follow my previous advice.

  • 1
    $\begingroup$ Market price equals \$7 (cost to consumers) is not the same as each unit costs \$7 (to produce). $\endgroup$ – Herr K. Apr 6 '18 at 16:14

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