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# Help me solve this economics problem

• 27-09-2013 6:42pm
Registered Users Posts: 788 ✭✭✭

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.

• Registered Users Posts: 2,497 ✭✭✭

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.

Simultaneous equation

• Registered Users Posts: 2,497 ✭✭✭

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.

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