10 Whh condion s comect fora irm wanting to maximise profit \") M?.MRP MAP-MC 11

Question

10 Whh condion s comect fora irm wanting to maximise profit ") M?.MRP MAP-MC 11, Given a cost function TC 200 + 16Q + BQ, what is the marginal cost function? a MC-200+80 b MC 16Q+80 c MC-16+160 d. MC 16 1602 12. TC 600+500+4Q2 What is the average fixed cost when 6 units are produced? Enter as a value 13. When average total cost is at its minimum a. average variable cost is decreasing. b. average total cost is equal to average variable cost. c marginal cost is equal to average fixed cost. d. marginal cost is equal to average total cost.

Explanation / Answer

10. d) MRP = MC

Profit maximizing level of output is achieved by a firm when its marginal revenue equals its marginal cost. The firm maximises its profits only as it fulfils the two rules I, e. MC = MR and the MC curve cuts the MR curve from below.

13. d) marginal cost is equal to average total cost.

If average cost is decreasing while output is increasing, marginal cost is less as compared to average cost. If average cost is increasing, marginal cost is greater as compared to average cost. But when average cost is neither increasing nor decreasing (in the above case at maximum), then marginal cost is equal to average total cost

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