**Cost Function and Average Variable Cost Calculation**A company's cost function is given by the equation:\[ TC = 25 + 30Q + 0.2Q^2 \]The task is to determine the equation for the company's average variable cost (AVC).**Options:**1. $ \text{AVC} = 25Q + 30 + 0.2Q $2. $ \text{AVC} = 30 + 0.4Q $3. $ \text{AVC} = 25 + 30Q + 0.4Q^2 $4. $ \text{AVC} = 30 + 0.2Q $5. $ \text{AVC} = 30Q + 0.2Q^2 $**Solution Approach:**To find the average variable cost, we must first isolate the variable portion of the total cost (TC) and divide it by the quantity (Q). The variable cost is represented by the parts of the TC that change with Q, which are $30Q + 0.2Q^2$. The fixed cost is the constant term, 25, and does not affect the AVC.Thus, we calculate AVC as:\[\text{AVC} = \frac{30Q + 0.2Q^2}{Q} = 30 + 0.2Q\]Hence, the correct equation for the average variable cost is **Option 4: $ \text{AVC} = 30 + 0.2Q $**.

Variable cost refers to the cost which changes with change in the level of output. The fixed cost…

Answered: A company's cost function is given as:…

A company's cost function is given as: TC = 25+ 30Q + 0.2Q² What is the equation for the company's average variable cost? Select one: O AVC= 25Q + 30+ 0.2Q

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Assume the cost of making 30 belts $800 the cost of makin 35 belts $900 and the cost equation is…

A: Marginal cost measures the change in total cost due to a change in quantity produced. Marginal cost…

Q: Assume that the situation can be expressed as a linear cost function. Find the cost function.…

A: The total cost function comprises of variable costs and fixed costs. The fixed costs remain the same…

Q: The average cost for a firm is given as a function as follows:- AC 3Q²-6Q + 20 = Calculate the Total…

A: WE Know that the average cost simply defined as the total cost per unit of output. That is :- AC =…

Q: The following cost data are for a firm in the short run: Output Total Cost 0 $400 1 500 2 550 3 600…

A: Given,

Q: Consider the following cost function. a. Find the average cost and marginal cost functions. b.…

A: We are given the total cost function which depends on the quantity whose range is also given. And…

Q: What is the price? to make it breakeven

A: Average cost is total cost divided by total production while marginal cost is the change in total…

Q: Marsha made an extensive study into the cost function of the dining halls on the A&M campus. She…

A: Marginal cost is the additional cost incurred when one more unit of output is produced. It is the…

Q: Suppose that a company has determined that a 70% experience curve accurately describes the evolution…

A: Cost incurred to produce 1st unit = $200Experience Curve Percent = 70%Experience Curve suggests…

Q: For a short-run cost function which of the following statements is (are) not true?

A: The marginal cost function intersects the average variable cost function where the average variable…

Q: 2) For the following cost functions calculate and plot the average fixed costs, average variable…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: in part b, how do we know that is the cost function? where are those variables coming from?

A: In part B of the question, you are asked to find expressions for the cost-minimizing levels of labor…

Q: A firm's short-run cost function is C(a) = 240q – 69° + 0.6q° + 600. Determine fixed cost, F;…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: Consider the following cost function: C(Q) = 1000+0.1Q I| Calculate total costs when Q=100 O 1,001…

A: Total cost function shows the relationship between cost and output produced. To determine cost at a…

Q: The total cost function of a firm is:- 23Q? - 13Q + 40 Find the average cost function

Q: Suppose that the total cost (in dollars) for a product is given by C(x)=1300+ 160 In(2x + 1) where x…

A: Given:Total cost: C (x) = 1,300 + 160ln(2x + 1) (a) MC = 320 / (2x + 1)Derive the MC from the total…

Q: If variable costs for a firm is $660, the average total cost is $8, and the firm sells 120 units,…

A: Variable cost as the name suggests changes with respect to the output produced. For example- the…

Q: Suppose that average total cost is $60, average fixed cost is $25, marginal cost is $45, and output…

A: Given, ATC = $60 AFC = $25 MC = $45 Output = 300.

Q: Give the formulas for and plat average fixed cest, AFC, marginal cast, MC, average variable cost,…

A: Cost curves are graphical representations of the relationship between the quantity of goods or…

Q: Compute the average variable cost, average cost, and marginal cost for each function.

A: Total cost is the cost that is incurred in production of a hiven level of output.Variable cost is…

Question

100%

**Cost Function and Average Variable Cost Calculation**

A company's cost function is given by the equation:

\[ TC = 25 + 30Q + 0.2Q^2 \]

The task is to determine the equation for the company's average variable cost (AVC).

**Options:**

1. $ \text{AVC} = 25Q + 30 + 0.2Q $
2. $ \text{AVC} = 30 + 0.4Q $
3. $ \text{AVC} = 25 + 30Q + 0.4Q^2 $
4. $ \text{AVC} = 30 + 0.2Q $
5. $ \text{AVC} = 30Q + 0.2Q^2 $

**Solution Approach:**

To find the average variable cost, we must first isolate the variable portion of the total cost (TC) and divide it by the quantity (Q). The variable cost is represented by the parts of the TC that change with Q, which are $30Q + 0.2Q^2$. The fixed cost is the constant term, 25, and does not affect the AVC.

Thus, we calculate AVC as:

\[
\text{AVC} = \frac{30Q + 0.2Q^2}{Q} = 30 + 0.2Q
\]

Hence, the correct equation for the average variable cost is **Option 4: $ \text{AVC} = 30 + 0.2Q $**.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

How to calculate the Average cost of producing 1, 2,...15
You are given a cost function of TC(Q)= 10,000+ 20 Q Assume Q = 500, initially. What higher Q would cause average cost to be reduced by 25%? a. 1,000 c. b. 2,000 d. 700 600
Find the cost function for the marginal cost function. C'(x) = 0 06 e 0.01x 7 fixed cost is S7 C(x) =D
The cost function of a firm is given as C1 = 400 + 20Q + 4Q using this cost function what is the efficient scale of the firm?.
Consider the following cost function (C): C= 0.25q3 - 4q? + 75q + F. The equation for average cost (AC) is: AC = |. (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a superscript can be created with the ^ character.) The equation for variable cost (VC) is: Vc=. (Properly format your expression using the tools in the palette.) The equation for marginal cost (MC) is: MC =. (Properly format your expression using the tools in the palette.)
Consider the following cost function: 3 C=0.2q³-6q² + 80q + 150. (Enter a numeric response using a real number rounded to two decimal places.) When output is 19 units, average cost is $ When output is 19 units, marginal cost is $ The output level where average variable cost equals marginal cost is units.
If the total fixed costs of manufacturing 100 fans is $7500. Calculate the average fixed costs.
Calculate Marginal cost if total cost changes from 80 to 160 and output rises from 1 to 3
Can you please solve question # 14
Find the cost function for the marginal cost function. F'(x) = - 30 e0.05x +800; 4 units cost $1900. F(x)= (Simplify your answer. Use integers or decimals for any numbers in the expression rounded to the nearest hundredth as needed.) kample Get more help. Cle