Can one Calculate Fixed and Variable Cost From TC and Quantity Alone?

Question

I have been asked a question and believe there is a mistake in the problem.

I have been given a table of values, Quantity and corresponding Total cost. From those numbers I can easily calculate the Average total cost and marginal cost.

I am asked to find the fixed and variable cost for each quantity. The question provides no other information. Is this possible?

Elias · Answer

As said in my comment,

The fixed cost is usually defined as the cost when quantity is equal to zero, and the variable cost as the total cost minus the fixed cost.

Hence, if $TC(q)$ is the total cost for the given level of quantity $q$, then $FC=TC(0)$ is the fixed cost, which is a constant independent of $q$; and  $VC(q)=TC(q)-FC$ is the variable cost.

For example, if $TC(q)=10+q$, then $FC=TC(0)=10$ and $VC(q)=TC(q)-FC=q$.

Can one Calculate Fixed and Variable Cost From TC and Quantity Alone?

One Answer

Add your own answers!

Ask a Question