Question

Suppose a perfectly competitive firm with total cost function given as: TC = 400+20Q-2Q²+2/3Q³

Answer 1

$MC = \frac{dTC}{dQ}$

$MC = 20-4Q+Q^2$

$Average cost = \frac{TC}{q}$

$= \frac {400+20Q-2Q^2+\frac{2}{3}Q^3}{Q}$

$Average cost = \frac{400}{Q}+20-2Q+\frac{2}{3}Q^3$$AVC(Q)= 20-4Q+Q^2$

$AFC(Q)= \frac{400}{Q}$