Question

a firm faces the following demand function: Q=25 – 0,25P. Its total cost function is given by the following relation: TC=2Q2 – 50Q+850. Calculate firm’s fixed cost at the level of output of 520 units.

Answer 1

Demand function

$Q=25 – 0.25P$

Total cost function

$TC=2Q2 – 50Q+850$

$Output, Q=520$

Fixed cost is the cost that is not affected by the level of output or Quantity.

From the Total cost function above therefore is 850

$Fixed cost=850$