The total cost function is TC = 2^3 - 6Q^2 + 14Q + 75. When does...

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Question

The total cost function is TC = 2^3 - 6Q^2 + 14Q + 75. When does diminishing returns to production set in? (value of Q) Numer

Answer 1

Answer #1

ANswer

3 units

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The diminishing return set in when the marginal cost stats increasing

so we need to find the minimum point on the marginal cost curve

The marginal cost is a change in the total cost and it is found by differentiation.

And the minimum point on the MC is found equating the MC first differentiation equal to zero.

MC * do=- dTC (0 – 60² +14Q + 75) = 3Q² - 12Q +14 (3Q² - 12Q+14) - = 6Q - 12 =0 Q dMC dQ 6Q = 12 Q = 2 Q

the MC is minimum at Q=2 means the diminishing return set in at Q=3 and if the product is allowed in fraction then it is just above 2 units

as the firm produces the third unit the diminishing return set in.

Answer 2

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