Water World Water Park has the following cost function: TC = 500 + 125q and MC = 125 a) Determine the company’s total variable cost, average fixed cost, average variable cost and average total cost. b) If the company produced 100,000 units of goods, what is its average variable cost? c) Determine the quantity that minimizes average total cost. Discuss your answer and your rationale.

Water World Water Park has the following cost function: TC = 500 + 125q and MC = 125 a) Determine the company’s total variable cost, average fixed cost, average variable cost and average total cost. b) If the company produced 100,000 units of goods, what is its average variable cost? c) Determine the quantity that minimizes average total cost. Discuss your answer and your rationale.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter7: Economies Of Scale And Scope

Section: Chapter Questions

Problem 7.3IP

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