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Help me solve this economics problem

  • 27-09-2013 6:42pm
    #1
    parc
    Registered Users Posts: 792 ✭✭✭


    A firm can produce and output of 100 for a total cost (TC) of £1100. It can also produce an output of 140 for a total cost (TC) of £1340. What are the fixed costs (FC)? Note that TC = FC + variable costs, where variable costs are determined by output Q, so that TC = FC + bQ

    I'm completely stumped. :confused:


Comments

  • #2
    ezra_pound
    Registered Users, Registered Users 2 Posts: 2,497 ✭✭✭ezra_pound


    parc wrote: »
    A firm can produce and output of 100 for a total cost (TC) of £1100. It can also produce an output of 140 for a total cost (TC) of £1340. What are the fixed costs (FC)? Note that TC = FC + variable costs, where variable costs are determined by output Q, so that TC = FC + bQ

    I'm completely stumped. :confused:

    Simultaneous equation


  • #3
    ezra_pound
    Registered Users, Registered Users 2 Posts: 2,497 ✭✭✭ezra_pound


    parc wrote: »
    A firm can produce and output of 100 for a total cost (TC) of £1100. It can also produce an output of 140 for a total cost (TC) of £1340. What are the fixed costs (FC)? Note that TC = FC + variable costs, where variable costs are determined by output Q, so that TC = FC + bQ

    I'm completely stumped. :confused:

    1100 = fc + b.100

    1340 = fc + b.140

    Fc = 1100 - b.100

    1340 = (1100- b.100) + b.140
    240= b40
    B=240/40
    B=6

    Does this look right?

    So then

    Fc = 1100 - b100
    = 500


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