9781118041581

238 Chapter 6 Cost Analysis

3,000

0 60

Output (Thousands of Units)

Total Cost (Thousands of Dollars)

5 10 15 20 25 30 35 40 45 50 55

2,000

1,000

Cost function

FIGURE 6.1

A Firm’s Total Costs

Total cost is the sum of

fixed cost and variable

cost.

Annual Output Total Cost Fixed Cost Variable Cost

(Repairs Thousands) ($ Thousands) ($ Thousands) ($ Thousands)

0 270.0 270 0.0

5 427.5 270 157.5

10 600.0 270 330.0

15 787.5 270 517.5

20 990.0 270 720.0

25 1,207.5 270 937.5

30 1,440.0 270 1,170.0

35 1,687.5 270 1,417.5

40 1,950.0 270 1,680.0

45 2,227.5 270 1,957.5

50 2,520.0 270 2,250.0

55 2,827.5 270 2,557.5

60 3,150.0 270 2,880.0

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