a. Compute average fixed costs (AFC) for each level of
output.
b. Compute average variable costs (AVC) for each level of
output.
c. Compute average total cost (ATC) for each level of
output. What level of output (per year) is the firm’s
capacity?
d. Plot the AFC, AVC, and ATC curves on a scale diagram
with dollars on the vertical axis and the level of output on
the horizontal axis. (It will be easier to draw this diagram
if you only graph the ATC and AVC curves beginning
with 3 units of output.)
18. Each of the following situations describes a firm’s production and
costs during a given year.
a. Firm A is producing 20 000 units of output, incurring a
total cost of $1 000 000 and total variable cost of $600
