Answer to Question #162300 in Macroeconomics for Godfrey Opanga

Question #162300

The cost function is given by÷

C(y)=120y-y^2+0.02^3.

Obtain the following :

1.The average variable cost

2.The marginal cost


1
Expert's answer
2021-02-10T15:21:39-0500

(a) The average variable cost can be found as follows:


C(y)avg=C(y)y=120yy2+0.023y,C(y)_{avg}=\dfrac{C(y)}{y}=\dfrac{120y-y^2+0.02^3}{y},C(y)avg=120y+0.023y.C(y)_{avg}=120-y+\dfrac{0.02^3}{y}.

(b)

MC=ddy(C(y)),MC=\dfrac{d}{dy}(C(y)),MC=ddy(120yy2+0.023)=1202y.MC=\dfrac{d}{dy}(120y-y^2+0.02^3)=120-2y.

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