Question

Suppose that the cost function of a firm is C(Q) = 490 + 10Q^2 . (a) Provide the mathematical expressions for AFC, AVC, AC and MC. (b) Graph all the costs above as a function of Q. (c) What is true about the relation between the marginal cost and the average costs when the latter are at their minimum? And when the average cost are increasing (decreasing)? Explain.

Answer 1

Page No. | Date: cle) = 100? +4903 Here 5 TUL= 1002 in TFC = 490 AS TC = Tuc + TELA H sol ARC = Tvc = 100? = 1000 to - AFL= 490 TAC = TC = ccal = 10a²+490 = 10 + 490 me = a (a) = roce - MC Cost ATC - (b) Cost AVE

Page No. Date : The Marginal Cont Curup cuts the average vamiable Cont and average total lost at their minimum point. After cutting both Curves at their minimum point me rises fantor than Ave and AC. When the average cost are decreaning me is lowen than than both costs and when both lost are increasing me is higher than both costs ON 3-76