Your company's cost function (monthly) can be defined as; TC = cost per unit (AC) × quantity supplied (Q). If the cost per unit (average cost) for your firm is AC = (800/Q) – 10 +20: a. What is the total cost function for your firm in terms of Q? b. How would you interpret the intercept term in this function? c. What is the marginal cost function for your firm? d. At what level of output (O) is AC minimized?

Your company's cost function (monthly) can be defined as; TC = cost per unit (AC) × quantity supplied (Q). If the cost per unit (average cost) for your firm is AC = (800/Q) – 10 +20: a. What is the total cost function for your firm in terms of Q? b. How would you interpret the intercept term in this function? c. What is the marginal cost function for your firm? d. At what level of output (O) is AC minimized?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.3P

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25) If a firm has the cost function C(q) = 5q² + 20q + 180 and the marginal cost function MC(q) = 10q + 20, at what quantity is its average cost minimized?
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Month (m): 4 Day (d): 1 Use the two numbers above, m and d, to complete the cost function for a perfectly competitive firm: Cost (q) = m q2 + d = (30) For a cost function like yours, Marginal Cost (MC) = 2 m q . Specifically, what are the following for the cost function you wrote out above? Fixed Cost = Average Total Cost = Cost (q)/q = Variable Cost = Average Fixed Cost = FC/q = Marginal Cost = 2 m q = Average Variable Cost = VC/q = (15) Fill in the table with your values from your cost function. q Total Cost AVC AFC ATC MC 0 0 0 -- -- -- 1 2 3 4 5 6
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