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) = 70 + 30Q + 20Q2 + 10Q3.

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) FC = 70 = $70

b) VC = 30*10+(20*10^2)+(10*10^3) = $12300

c) TC = VC+FC = 12300+70 = $12370

d) average FC = 70/10 = $7

e) average VC = 12300/10 = $1230

f) average total cost = 12370/10 = $1237

g) TC function = 70 + 30Q + 20Q^2 + 10Q^3

differentiate above function to get MC function

MC function = 30+40Q+30Q^2

MC @10 unit = 30+40*10+30*10*10 = $3430

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

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