11/8/2017 Assignment Print View

Score: 100/100 Points 100 %

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11/8/2017 Assignment Print View

1. Award: 19 out of 19.00 points

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

C(Q) = 110 + 35Q + 30Q2 + 5Q3.

Based on this information, determine the following:

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

$110

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

$8,350

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

$8,460

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

$11

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

$835

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

$846

g. The marginal cost when Q = 10.

$2,135

References

Worksheet Learning Objective:

05-04 Explain the
difference between
and the economic
relevance of fixed
costs, sunk costs,
variable costs, and
marginal costs.

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11/8/2017 Assignment Print View

Difficulty: 02 Learning Objective:

Medium 05-05 Calculate
average and
marginal costs from
algebraic or tabular
cost data and
illustrate the
relationship between
average and
marginal costs.

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

C(Q) = 110 + 35Q + 30Q2 + 5Q3.

Based on this information, determine the following:

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

$ 110

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

$ 8,350

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

$ 8,460

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

$ 11

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

$ 835

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

$ 846

g. The marginal cost when Q = 10.

$ 2,135

Explanation:

a. FC = $110.

b. VC(10) = 35(10) + 30(10)2 + 5(10)3 = $8,350.

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11/8/2017 Assignment Print View

c. C(10) = 110 + 35(10) + 30(10)2 + 5(10)3 = $8,460.

d. AFC(10) = $110 / 10 = $11.

e. AVC(10) = VC(10) / 10 = $8,350 / 10 = $835.

f. ATC(10) = AFC(10) + AVC(10) = $846.

g. MC(10) = 35 + (2*30)(10) + (3*5)(10)2 = $2,135.

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