Homework Answers
Before tax :
AC(q) = C/q = .4√q + 1000/q2
dAC/dq= .2/√q -2000/q3 = 0
.2/√q = 2000/q3
q2.5 = 10,000
1) q = 39.811 units
Due to tax , AC will rise by 500
so New AC, AC'(q) = AC(q) + 500
2) at cost minimization, dAC'(q)/dq = 0
q= 39.811 units
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