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 + 20Q + 25Q2 + 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) Our fixed cost is the costs we incur when we do not produce any units. So we substitute in Q = 0 to our equations

C(Q) = 70 + 20Q + 25Q2 + 10Q3

Fixed cost of producing 10 units of output = $70

b)  So our variable costs are:

Total Variable Costs = Total Costs

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