An economist estimated that the cost function of a single-product firm is: C( Q

Question

An economist estimated that the cost function of a single-product firm is:

C(Q) = 100 + 25Q + 15Q2 + 5Q3.

Based on this information, determine the following:

a. The fixed cost of producing 10 units of output.

$

b. The variable cost of producing 10 units of output.

$

c. The total cost of producing 10 units of output.

$

d. The average fixed cost of producing 10 units of output.

$

e. The average variable cost of producing 10 units of output.

$

f. The average total cost of producing 10 units of output.

$

g. The marginal cost when Q = 10.

$

Explanation / Answer

1. fixed cost C(10) = 100

2. VC = 25(10)+15(10)^2+5(10)^3 = 6750

3. TC = FC + VC = 6850

4 . AFC = 100/10 = 10

5 . AVC = 6750/10 = 675

6 . ATC = 6850/10 = 685

7. MC = 25 + 30Q + 15Q^2

Q = 10 ; MC = 25 + 30(10) + 15(10)^2 = 1825

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