Economics Measures of Cost Name: Key 1. How do I calculate total fixed cost? FIXED COSTS DOES NOT CHANGE.

. 2. Calculate the total fixed costs Number of Output Workers 0 1 2 0 15 35

Marginal Product 0 15 20

Total Fixed Costs 65 65 65

3. How do I calculate total variable cost? The number of workers multiplied by the cost of ONE worker (which is a variable). 4. Calculate the total variable costs Number of Output Marginal Total Fixed Total Workers Product Costs Variable Costs 0 1 2 0 15 35 0 15 20 40 40 40 0 20 40

Mr. Powers March 1, 2010 - Key

5. How do I calculate the total cost? Fixed costs plus variable costs. 6. Calculate the total costs Number Output Marginal Total of Product Fixed Workers Costs 0 0 0 35 1 2 14 40 14 26 35 35

Total Variable Costs 0 20 40

Total Costs 35 55 75

7. How do I calculate the marginal cost? Cost of each variable (1 worker) divided by marginal product of labor. 8. Calculate the marginal costs Number Output Marginal Total of Product Fixed Workers Costs 0 0 0 40 1 2 15 35 15 20 40 40

Total Variable Costs 0 25 50

Total Costs 40 65 90

Marginal Costs 1.67 1.25

Mr. Powers March 1, 2010 - Key