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) = 50 + 25Q + 30Q2 + 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

a) The fixed cost of producing 10 units of output = 50

b) The variable cost of producing 10 units of output

VC(q=10) = 25(10) + 30(10)2 + 5(10)3 = 250 + 3000 + 5000 = 8250

c)

C(q=10) = VC(q=10) + F = 8250 + 50 = 8300

d) AFC(q=10) = 50/10 = 5

e)

AVC(q=10) = 8250/10 = 825

f)

ATC(q=10) = AVC(q=10) + AFC(q=10) = 825+5 , = 830

g)

Q=10 Total cost is 8300/10 or , so average cost is 830 At Q = 11, total cost is 9130/10 , average = 913 At q=10, the cost of your next unit produced will be total cost at Q 11 minus total cost at Q 10 or 913 - 830 = 83 MC is 83 for the 11th unit produced.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

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