Question

if the average cost of the firm is estimated to be AC=500/Q+10+5Q+25Q the fixed cost of the firm​

Answer 1

Explanation:

(A) Write an expression for each of the following cost concepts:

a. Total Fixed Cost

b. Average Fixed Cost

c. Total Variable Cost

d. Average Variable Cost

e. Average Total Cost

(B) Calculate the values of marginal cost and the costs in (a)-(e) above for

Q

=

0

,

1

,

2

,

3

.

(C) Determine the quantity that minimizes average total cost. Demonstrate that the predicted relationship between marginal cost and average cost holds.