A companies total cost are given TC = 1000 + 2q + 5q 2 Write the expressions for

Question

A companies total cost are given TC = 1000 + 2q + 5q2 Write the expressions for: a. Total fixed cost b. Average Fixed cost c. Total Variable cost d. average variable cost e. average total cost f. if marginal cost for business is MC = 2 + 10q, what is thequantity that minimizes average total cost? Please help, don't know how to start this. A companies total cost are given TC = 1000 + 2q + 5q2 Write the expressions for: a. Total fixed cost b. Average Fixed cost c. Total Variable cost d. average variable cost e. average total cost f. if marginal cost for business is MC = 2 + 10q, what is thequantity that minimizes average total cost? Please help, don't know how to start this.

Explanation / Answer

a. Total Fixed cost is the cost that does not vary byquantity. That is, all parts of TC that don't vary withq. So, TFC = 1000. b. Average fixed cost is the same as fixed cost per quantity. Therefore, you take TFC/q. In this situation, TFC =1000/q. c. Total variable cost is the cost that DOES vary byquantity. That is, all parts of the TC that vary withq. So, TVC = 2q + 5q2. d. Average variable cost is the same as total variable costper quantity. Therefore, you take TVC/q. So, AVC = (2q+ 5q2)/q = 2 + 5q. e. Average total cost is the same as total cost perquantity. Therefore, you take TC/q. So, ATC = (1000 +2q + 5q2)/q = 1000/q + 2 + 5q. You can also findthis by summing, AFC and AVC ( 1000/q + (2q + 5q2)),which is obviously the same thing. f. Now, it's probably important that you know how themarginal cost was derived. It was derived by differentiatingthe total cost. If TC = 1000 + 2q + 5q2 dTC/dq = 2 + 10q As far as minimizing average total cost, you want to find itsderivative and set it equal to zero. If ATC = 1000/q + 2 + 5q, dATC/dq = -1000/q2 + 5 Setting -1000/q2 + 5 = 0 1000/q2 = 5 200 = q2 q = 200 Note, marginal cost was not needed in my solution. The logic behind this is based on calculus. To find anextreme of a function, you need to find the point at which itsfirst derivative equals zero.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.