You are given the following cost functions:
Question # 00567711
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Updated on: 07/28/2017 04:05 PM Due on: 07/29/2017
You are given the following cost functions:
TC =100 + 60Q- 3Q^2 + 0.1Q^3
TC =100 + 60Q+ 3Q^2
TC = 100 + 60Q
a. Compute the average variable cost, average cost, and marginal cost for each function.
Plot them on a graph using excel. (For question a, compute the required costs and plot the curves for quantities 1 to 20)
b. In each case, indicate the point at which diminishing returns occur. Also indicate the point of maximum cost efficiency (i.e., the point of minimum average cost).
c. For each function, discuss the relationship between marginal cost and average variable cost and between marginal cost and average cost. Also discuss the relationship between average variable cost and average cost.
TC =100 + 60Q- 3Q^2 + 0.1Q^3
TC =100 + 60Q+ 3Q^2
TC = 100 + 60Q
a. Compute the average variable cost, average cost, and marginal cost for each function.
Plot them on a graph using excel. (For question a, compute the required costs and plot the curves for quantities 1 to 20)
b. In each case, indicate the point at which diminishing returns occur. Also indicate the point of maximum cost efficiency (i.e., the point of minimum average cost).
c. For each function, discuss the relationship between marginal cost and average variable cost and between marginal cost and average cost. Also discuss the relationship between average variable cost and average cost.
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Solution: You are given the following cost functions: