Answer to Question #154674 in Economics of Enterprise for Muhammad Ammar Khan

Question

1.     Given TC = 100 + 60Q – 12Q2 + Q3, find:                                                2 marks

a.      The equations of the TVC, AVC, and MC functions.

b.     The level of output at which AVC and MC are minimum, and prove that the AVC and MC curves are U-shaped.

c.      Find the AVC and MC for the level of output at which the AVC curve is minimum.

2.     Determine the best level of output for a perfectly competitive firm that sells its product at P = $4 and faces TC = 0.04Q3– 0.9Q2 + 10Q + 5. Will the firm produce this level of output? Why?                                                                        2 marks                      

3.    Given the following cost function: TC = 1500 + 15Q – 6Q 2 + Q3            2 marks         

a.    Determine the total fixed cost for producing 1000 units of output and 500 units of output.

b.    What is AFC at:

                                                            i.     1000 units of output b)

                                                          ii.     500 units of output iii.

c.     Determine TVC, AVC, MC and AC at 50 units of output.

Answer 1

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