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4. (30) A production process has a total fixed cost of TFC = $100 and average variable cost (AVC) as a function of output lev
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Answer #1

I)AVC=5Q^2-2Q+6

TVC=AVC*Q

TVC=5Q^3-2Q^2+6Q

TFC=100

TC=TVC+TFC

TC=5Q^3-2Q^2+6Q+100

II)MC=∆TC/∆Q

MC=15Q^2-4Q+6

III)MC cuts AVC at its minimum.Thus,MC=AVC when AVC is minimum.

15Q^2-4Q+6=5Q^2-2Q+6

Q=0.2

When Q=0.2,AVC is at its minimum

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