Output TFC TVC TC AFC AVC ATC MC If Price=

0 10 0 10 NA NA NA NA
1 10 8 18 10 8 18 8
2 10 12 22 5 6 11 4
3 10 15 25 3.333333 5 8.333333 3
4 10 17 27 2.5 4.25 6.75 2
5 10 20 30 2 4 6 3
6 10 24 34 1.666667 4 5.666667 4
7 10 29 39 1.428571 4.142857 5.571429 5
8 10 36 46 1.25 4.5 5.75 6
9 10 48 58 1.111111 5.333333 6.44 12
10 10 70 80 1 7 8 22

90
80
70
60
50 TFC
40 TVC
TC
30
20
10
0
1 2 3 4 5 6 7 8 9 10 11
 8 TR Total Profit 100
0 -10
8 -10 80
16 -6
24 -1
60
32 5
40 10 TR
40 Total Profit
48 14 TC
56 17
20
64 18
72 14
80 0 0
1 2 3 4 5 6 7 8 9 10 11
-20

The completed table shows that the firm is experiencing diminishing marginal returns from output 5 onwards. This m
produced by each additional unit of input is decreasing. This is because the firm is reaching the limits of its productio
output is becoming more difficult and expensive to produce.

The firm should carefully consider its production decisions in light of diminishing marginal returns. It should ensure
where the additional benefits of producing more output are greater than the additional costs.

Here are some specific conclusions that can be drawn from the table:

The firm's total fixed costs (TFC) are constant at $10, regardless of output level.
The firm's total variable costs (TVC) increase with output, but at a decreasing rate. This is because of diminishing ma
The firm's total costs (TC) increase with output, but at a decreasing rate because of diminishing marginal returns.
The firm's average fixed costs (AFC) decrease with output. This is because the TFC is spread over a larger number of
The firm's average variable costs (AVC) decrease with output up to output 5, where they reach a minimum. After ou
of diminishing marginal returns.
The firm's average costs (AC) decrease with output up to output 5, where they reach a minimum. After output 5, the
diminishing marginal returns.
The firm's marginal costs (MC) increase with output. This is because of diminishing marginal returns.
The firm should produce at an output level where the MC is equal to the price of output. This will ensure that the fir
 TR
Total Profit
TC

11

rom output 5 onwards. This means that the additional output

nal returns. It should ensure that it is producing at an output level

is because of diminishing marginal returns.

minimum. After output 5, the AC start to increase because of

rginal returns.
ut. This will ensure that the firm is maximizing its profits.
Output TFC TVC TC AFC AVC ATC MC Price Profit
0 10 0 10 NA NA NA NA 8
1 10 8 18 10 8 18 8 8 -10
2 10 12 22 5 6 11 4 8 -3
3 10 15 25 3.333333 5 8.333333 3 8 -0.3333333
4 10 17 27 2.5 4.25 6.75 2 8 1.25
5 10 20 30 2 4 6 3 8 2
6 10 24 34 1.666667 4 5.666667 4 8 2.3333333
7 10 29 39 1.428571 4.142857 5.571429 5 8 2.4285714
8 10 36 46 1.25 4.5 5.75 6 8 2.25
9 10 48 58 1.111111 5.333333 6.44 12 8 1.56
10 10 70 80 1 7 8 22 8 0
25

20

15 AFC
AVC
ATC
10 MC
Price

0
1 2 3 4 5 6 7 8 9 10