from a given cost function
TC=60+0.5q+0.3q^2 find out fixed cost, average variable cost and marginal cost
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Total cost = 60 + 0.5 q + 0.3 q²
q = quantity purchased.
Fixed cost = 60, as it does not change with the quantity purchased. It is the cost when the quantity purchased is q = 0.
Variable cost = the variable part of the total cost.
= 0.5 q + 0.3 q²
Average variable cost = variable cost / quantity
= 0.5 + 0.3 q
Total cost = fixed cost + q * average variable cost
marginal cost is the additional cost for purchasing qth item/article/commodity.
= cost of buying q items - cost of buying q-1 items
= (60 + 0.5 q + 0.3 q²) - [60 + 0.5 (q-1) + 0.3 (q-1)² ]
= 0.5 + 0.6 q - 0.3
= 0.2 + 0.6 q
q = quantity purchased.
Fixed cost = 60, as it does not change with the quantity purchased. It is the cost when the quantity purchased is q = 0.
Variable cost = the variable part of the total cost.
= 0.5 q + 0.3 q²
Average variable cost = variable cost / quantity
= 0.5 + 0.3 q
Total cost = fixed cost + q * average variable cost
marginal cost is the additional cost for purchasing qth item/article/commodity.
= cost of buying q items - cost of buying q-1 items
= (60 + 0.5 q + 0.3 q²) - [60 + 0.5 (q-1) + 0.3 (q-1)² ]
= 0.5 + 0.6 q - 0.3
= 0.2 + 0.6 q
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