Q

P

TFC TVC TC AVC ATC MC TR Profits

0 $28 $20 $0

-

1 $28 $20 $20 -

2 $28 $20 $25 -

3 $28 $20 $35 -

4 $28 $20 $52 -

5 $28 $20 $80 -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

TABLE 8.7
202 8 • Perfect Competition

Step 1. Determine the cost structure for the firm. For a given total fixed costs and variable costs, calculate total

cost, average variable cost, average total cost, and marginal cost. Follow the formulas given in the Production,

Costs, and Industry Structure chapter. These calculations are in Table 8.8.

Q

P

TFC TVC

TC

AVC

(TFC+TVC)

(TVC/Q)

ATC

(TC/Q)

MC
(TC2−TC1)/
(Q2−Q1)

0 $28 $20 $0

$20+$0=$20

-

-

-

1 $28 $20 $20 $20+$20=$40

$20/1=$20.00 $40/1=$40.00

2 $28 $20 $25 $20+$25=$45

$25/2=$12.50 $45/2=$22.50

3 $28 $20 $35 $20+$35=$55

$35/3=$11.67 $55/3=$18.33

4 $28 $20 $52 $20+$52=$72

$52/4=$13.00 $72/4=$18.00

5 $28 $20 $80 $20+$80=$100 $80/5=$16.00 $100/5=$20.00

($40−$20)/

(1−0)= $20
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