Question

Find out fixed cost, average variable cost and marginal cost from the given cost function TC=60+0.5q+0.3q2

Answer 1

TC(q) = 60 + 0.5 q + 0.3 q²
TC (q -1) = 60 + 0.5 (q -1) + 0.3 (q - 1)²
               = 59.8 - 0.1 q + 0.3 q²

Marginal cost :  TC(q) - TC(q-1) = 0.6 q + 0.2

Fixed cost = 60  constant in TC

variable cost = VC(q) = 0.5 q + 0.3 q²  : as this component varies depending on q.
Average variable cost = VC(q) / q = 0.5 + 0.3 q