4 Suppose that the cost function of q is given by: C(q) = 16+4q+q² a) Find the fixed and variable cost. b) Find the average cost and marginal cost. c) Draw the relationship between MC and AC. Prove that they always intersect at the minimum. (Hint: compute the derivative of AC with respect to q and set it equal to zero. Then use this equation to show that MC = AC.)

4 Suppose that the cost function of q is given by: C(q) = 16+4q+q² a) Find the fixed and variable cost. b) Find the average cost and marginal cost. c) Draw the relationship between MC and AC. Prove that they always intersect at the minimum. (Hint: compute the derivative of AC with respect to q and set it equal to zero. Then use this equation to show that MC = AC.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4. Variouss measures of cost Douglas Fur is a small manufacturer of fake-fur boots in San Diego. The following table shows the company's total cost of production at various production quantities. Fill in the remaining cells of the following table. Quantity Total Cost Marginal Cost (Dollars) Fixed Cost Variable Cost Average Variable Cost Average Total Cost (Pairs) (Dollars) (Dollars) (Dollars) (Dollars per pair) (Dollars per pair) 120 1 200 2 240 3 285 4 340 425 6 540 On the following graph, plot Douglas Fur's average total cost (ATC) curve using the green points (triangle symbol). Next, plot its average variable cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol). (Hint: For ATC and AVC, plot the points on the integer; for example, the ATC of producing one pair of boots is $200, so you should start your ATC curve by placing a green point at (1, 200). For MC, plot the points between the integers:…
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Assume that cost curves have the standard U-shape. Suppose average total cost (ATC) is at its minimum when the output is 10 units. Also, we know that marginal cost of the 9th unit is $5. What is the ATC when 10 units are produced? 1) $5. 2) Greater than $5. 3) Less than $5. 4) There isn't sufficient information to answer the question.
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