4. Suppose a firm has a total cost (TC) function over its output (y > 0) given by TC(y) = 3y² +7y + 24 (a) What is the firm's average cost function (AC)? (b) What is the firm's marginal cost function (MC)? (c) Over what range of y is the firm's AC declining? (d) Show that (i) MC < AC when AC is declining

4. Suppose a firm has a total cost (TC) function over its output (y > 0) given by TC(y) = 3y² +7y + 24 (a) What is the firm's average cost function (AC)? (b) What is the firm's marginal cost function (MC)? (c) Over what range of y is the firm's AC declining? (d) Show that (i) MC < AC when AC is declining

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

4. Suppose a firm has a total cost (TC) function over its output (y > 0) given by
TC(y) = 3y² + 7y + 24
(a) What is the firm's average cost function (AC)?
(b) What is the firm's marginal cost function (MC)?
(c) Over what range of y is the firm's AC declining?
(d) Show that
(i) MC < AC when AC is declining
(ii) MC = AC at the point where the AC curve is horizontal
(iii) MC > AC when AC is increasing

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