Question

Assume the following Total Cost Function: C = 7210 + 8Q – 2 Q2 + 2 Q3

• What is the Fixed Cost
equation?

• What are fixed costs when Q = 10 ?

• What is the Variable Cost
equation?

• What are variable costs when Q = 10
?

• What is the Average Total Cost
equation?

• What are average Total Costs when Q =
10?

• What is the Average Variable Cost
equation?

• What are Average Variable Costs when Q =
10?

• What is the Marginal Cost
Equation?

• What are Marginal Costs when Q = 10?

Answer #1

Suppose Dan's cost of making pizzas is
C(Q)=8Q+(Q2/160),C(Q)=8Q+(Q2/160),
and his marginal cost is
MC=8+(Q/80).MC=8+(Q/80).
Dan is a price taker.
a. What is Dan's supply function?
Q = 160P + 640 if P ≥ 8.
Q = 80P - 640 if P ≥ 8.
Q = 80P - 160 if P ≥ 10.5.
Q = 80P + 640 if P ≥ 8.
Q = 80P - 80 if P ≥ 10.5.
b. What if Dan has an avoidable fixed cost...

3) Suppose a firm’s cost function is C(q) = 3q2 (2 squared) +
15.
a. Find variable cost, fixed cost, average cost, average
variable cost, and average fixed cost.(Hint: Marginal cost is given
by MC = 6q.)
b. Find the output that minimizes average cost.
:4) Suppose that a firm’s production function is q = x0.5 in the
short run, where there are fixed costs of $1,000, and x is the
variable input whose cost is $1,000 per unit. What...

1- Match the following
Total Cost C = Total Cost - Fixed Cost
Fixed Cost A. = Variable Cost + Fixed Cost
Variable Cost B. = Total Cost - Variable Cost
Economic Costs .D. include Opportunity Cost
2- Match the following
Average fixed cost A= fixed cost / quantity
Average variable cost B= Variable cost / Q
Average total cost C= total cost / quantity
Marginal Cost D= Delta total cost / delta quantity
3-
If Marginal Cost is equal...

Given the following total cost function TC(q) = 1000 + 13q.
Find the fixed cost, variable cost, average total cost, and the
marginal cost. How do you know that these costs are in the
short-run? Explain.

A firm faces the following Average
Cost function:
AC
= Q2– 18Q + 100 + 10Q-1
Find Q which
minimizes
(a) Average
Variable Cost
(b) Marginal
Cost.

The following equations represent the function of total cost of
a monopoly and the demand for a product made by the monopoly.
c = (1/12)q3 - (5/2)q2 + 30q + 100
q = 25 - p
a. Obtain the equation for revenue (r) coming from the sales of
the product expressed in fonction of the quantities produced
(q)
b. Obtain the equation for profits (?)
c. Obtain the level of production q* that would maximize the
profits of the monopoly....

1.If the total cost function is C(Q) = 15Q2+ 10, what
is the marginal cost?
10/Q
15Q
15Q+10/Q
30Q
None of these.
2.When a firm increased its output by one unit, its AFC
decreased. This is an indication that
the law of diminishing returns has taken effect.
MC < AFC.
AVC < AFC.
the firm is spreading out its total fixed cost.
3.If the production function is f(L, K) = aL +2aK where a > 0
is a constant, L...

Suppose a representative firm producing in a perfectly
competitive industry has the
following cost function:
C(q) = q2 + 8q + 36
a. Solve for the firm’s average cost function.
b. At what level of q is average cost minimized (i.e. what is the
minimum efficient scale for the
firm)? What is the value of average cost at this level of q?
c. Suppose all firms in this industry are identical and the demand
function for this industry is as...

Suppose that the total benefit and total cost from a continuous
activity are, respectively, given by the following equations:
B(Q) = 100 + 36Q –
4Q2 and C(Q) =80 + 12Q.
(Note: MB(Q) = 36 – 8Q and
MC(Q) = 12.)
Instructions: Use a negative sign (-) where
appropriate.
a. Write out the equation for the net benefits.
N(Q) = ______________
+________________ Q
+________________ Q2
b. What are the net benefits when Q = 1? Q =
5?
Net benefits when Q...

2. Suppose a representative firm producing in a perfectly
competitive industry has the following cost function: C(q) = q2 +
8q + 36 a. Solve for the firm’s average cost function. b. At what
level of q is average cost minimized (i.e. what is the minimum
efficient scale for the firm)? What is the value of average cost at
this level of q? c. Suppose all firms in this industry are
identical and the demand function for this industry is...

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