Question

Given a short run cost function as T C =1 /Q 3 (3 is under subscript ) - 2Q 2(2 is under subscript ) +60Q+100 , find the minimum value of AVC and MC

a) Determine the total fixed cost for producing 100 and 300 units of output, respectively.

b) What is Average fixed cost for 100 and 300 units of output?

Answer 1

a) total fixed cost is 100(derived from total cost function). It is not depended on output.

b)$AFC=TFC/Q.$

$AFC(100)=100/100=1.$

$AFC(300)= 100/300=1/3.$