Question

illustrate the relation between marginal cost (MC),average total cost (ATC), average variable cost (AVC) and average fixed cost (AFC) curves.Given a total cost function.
$tc(q) = 7q {2} + 5q + 75$
where q represent quantity of output produced. Find the expression for variable cost (VC). Fixed cost (FC), AVC, AFC and ATC
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Answer 1

Since the fixed cost does not change with the output, the average fixed cost decreases as the output increases. The average variable cost does not always increase in proportion to an increase in the output. Marginal costs also come down until 44 units are produced after which they start rising.