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Question on effects of fixed costs

From data in the table, illustrates what happens to the firm’s output choice and profit if the fixed cost of production raise from $50 to $100, and then to $150. What general conclusion can you attain about the effects of fixed costs on the firm’s output choice?

1747_tbl 0.png

The table below illustrates the firm’s revenue and cost information for Fixed Cost, FC of 50, 100, and 150.

255_tbl 1.png

In all given cases, with fixed cost equivalent to 50, then 100, and then 150, the firm will generates 8 units of output since this is the point closest to where price equals marginal cost without having marginal cost exceed price.  Fixed costs do not affect the optimal quantity, since they do not influence marginal cost.

 

 

 

 

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