(b) Formidable Manufacturing Company has the following cost functions in the short run, where production level, Q is measured in '000s of units: TC = 0.5Q³ – 2Q² + 5Q FC = 7 (i) Calculate the optimum output level for this company in the short run (ii) Calculate the marginal cost for this company at a production level of 2,500 units. (iii) The industry for in which Formidable Manufacturing Company operates classifies its members by the following output: Size Micro Small Medium Large Output (Q): 0-1000 1000-3000 3000-6000 >6000 In the long run, the AVC for this industry is given by: AVC = 0.4Q² – 3Q + 15. Determine the optimum plant size for this industry.
(b) Formidable Manufacturing Company has the following cost functions in the short run, where production level, Q is measured in '000s of units: TC = 0.5Q³ – 2Q² + 5Q FC = 7 (i) Calculate the optimum output level for this company in the short run (ii) Calculate the marginal cost for this company at a production level of 2,500 units. (iii) The industry for in which Formidable Manufacturing Company operates classifies its members by the following output: Size Micro Small Medium Large Output (Q): 0-1000 1000-3000 3000-6000 >6000 In the long run, the AVC for this industry is given by: AVC = 0.4Q² – 3Q + 15. Determine the optimum plant size for this industry.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![(b) Formidable Manufacturing Company has the following cost functions in the short run, where production
level, Q is measured in '000s of units:
TC =
0.5Q³ – 2Q² + 5Q
FC = 7
(i)
Calculate the optimum output level for this company in the short run
(ii)
Calculate the marginal cost for this company at a production level of 2,500 units.
(iii)
The industry for in which Formidable Manufacturing Company operates classifies its members
by the following output:
Size
Micro
Small
Medium
Large
Output (Q):
0-1000
1000-3000
3000-6000
>6000
In the long run, the AVC for this industry is given by: AVC =
0.4Q² – 3Q + 15.
Determine the optimum plant size for this industry.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc5f15f39-fd37-4447-9c38-7ebe4d8fb965%2Fd98beff0-7cd3-4a7a-8775-08d9ca7c57f0%2Fhr7zd8_processed.jpeg&w=3840&q=75)
Transcribed Image Text:(b) Formidable Manufacturing Company has the following cost functions in the short run, where production
level, Q is measured in '000s of units:
TC =
0.5Q³ – 2Q² + 5Q
FC = 7
(i)
Calculate the optimum output level for this company in the short run
(ii)
Calculate the marginal cost for this company at a production level of 2,500 units.
(iii)
The industry for in which Formidable Manufacturing Company operates classifies its members
by the following output:
Size
Micro
Small
Medium
Large
Output (Q):
0-1000
1000-3000
3000-6000
>6000
In the long run, the AVC for this industry is given by: AVC =
0.4Q² – 3Q + 15.
Determine the optimum plant size for this industry.
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