OUTPUT AVERAGE FIXED COST AVERAGE VARIABLE COST AVERAGE TOTAL COSTS

1 100 50 150
2 50 40 90
3 33.3 33.3 67
4 25 27.5 52.5
5 20 30 50
6 16.6 36.7 53.3
7 14.3 50 64.3
8 12.5 80 92.5
 160

140

120

100
COSTS

AVERAGE FIXED
80 COST

AVERAGE
60 VARIABLE COST

AVERAGE TOTAL
COSTS
40

20

0
1 2 3 4 5 6 7 8
OUTCOME
ECONOMIES OF SCALE DISECONOMIES OF SCALE
OUTPUT TOTAL COST MARGINAL COST
1 150 -
2 180 30
3 200 20
4 210 10
5 250 40
MARGINAL COST
6 320 70
7 450 130 350

8 740 290 300

250

200

150

100

50

0
1 2 3 4
MARGINAL COST

3 4 5 6 7
 Variable Total Marginal Marginal
Output Fixed Cost Total Cost Profit
Cost Revenue Revenue Cost
0.00 1 0.00 1.00 0.0000 -1.00 0.0000 0
7.00
0.25 1 0.02 1.02 0.3125 -0.71 0.3125 0.02
0.50 1 0.06 1.06 0.6250 -0.44 0.3125 0.04 6.00
0.75 1 0.14 1.14 0.9375 -0.20 0.3125 0.08
1.00 1 0.25 1.25 1.2500 0.00 0.3125 0.11 5.00
1.25 1 0.39 1.39 1.5625 0.17 0.3125 0.14
1.50 1 0.56 1.56 1.8750 0.32 0.3125 0.17 4.00
1.75 1 0.77 1.77 2.1875 0.42 0.3125 0.21
3.00
2.00 1 1.00 2.00 2.5000 0.50 0.3125 0.23

COSTS
2.25 1 1.27 2.27 2.8125 0.54 0.3125 0.27 2.00
2.50 1 1.56 2.56 3.1250 0.57 0.3125 0.29
2.75 1 1.89 2.89 3.4375 0.55 0.3125 0.33 1.00
3.00 1 2.25 3.25 3.7500 0.50 0.3125 0.36
3.25 1 2.64 3.64 4.0625 0.42 0.3125 0.39 0.00
0.00
3.50 1 3.06 4.06 4.3750 0.32 0.3125 0.42
-1.00
3.75 1 3.52 4.52 4.6875 0.17 0.3125 0.46
4.00 1 4.00 5.00 5.0000 0.00 0.3125 0.48
-2.00
4.25 1 4.52 5.52 5.3125 -0.21 0.3125 0.52
4.50 1 5.06 6.06 5.6250 -0.44 0.3125 0.54

0.6000

0.5000

0.4000

COST 0.3000

0.2000

0.1000

0.0000
0.0
 PROFIT MAXIMISATION
7.00

6.00

5.00

4.00

3.00
COSTS

2.00

1.00

0.00
0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 2.50 2.75 3.00 3.25 3.50 3.75 4.00 4.25 4.50

-1.00

-2.00

OUTPUT

Tota l Cost Tota l Revenue Profit

MR=MC
0.6000

0.5000

0.4000
COST

0.3000

0.2000

0.1000

0.0000
0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 2.50 2.75 3.00 3.25 3.50 3.75 4.00 4.25 4.50

OUTPUT

Margi nal Revenue Margi na l Cost

0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 2.50 2.75 3.00 3.25 3.50 3.75 4.00 4.25 4.50

OUTPUT

Margi nal Revenue Margi na l Cost

4.25 4.50
4.25 4.50