Question

The (total) cost function is given by C = 60 + 80q – 15q2 + 2q3 , where q is the quantity produced by the firm. where, FC(q)=60, VC(q)=80q – 15q² + 2q³ , MC(q)=80 – 30q+ 6q²and AFC(q)=60/q. 1)Write down the average variable cost function AVC(q). 2)Write down the average total cost function AC(q). 3)Find the break-even point (q and AC) and Find the shut-down point (q and AVC). 4). Draw a graph to illustrate AC, AVC, and MC functions for quantities Q on the interval between 1 and 10. Make sure you show (put the numbers there) where exactly the MC curve intercepts AVC and AC curves. 5)If the price is P = 100, calculate the profit-maximizing firm’s profit.

Answer 1

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