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Suppose the total cost TC=10000+0.5Q. Find the fixed cost and marginal cost. Draw the marginal cost...

Suppose the total cost TC=10000+0.5Q. Find the fixed cost and marginal cost. Draw the marginal cost curve. Give examples of industries that will face a marginal cost curve like one you have identified in your graph.

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Answer #1

Fixed cost :

Fixed cost doesn't changes with output so at every level of output fixed cost remains same. Here in cost function, 10,000 is fixed cost. And 0.5+Q which changes with quantity is variable cost.

Marginal cost :

Marginal cost is the extra cost occurred with the production of one more extra unit. It can be find by taking derivative of total cost function.

MC =dTC /dQ

=0.5.

Marginal cost curve on graph:

marginal cost is constant fir this firm.

Examples of this kind of marginal cost curve industry :

Utility or other monopolies.

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