A firm has the short-run total cost function C(q)=100+10q-2q^2+q^3. a) Derive the equations for...


A firm has the short-run total cost function {eq}C(q)=100+10q-2q^{2}+q^{3} {/eq}.

a) Derive the equations for average total cost, average fixed cost, average variable cost, and marginal cost.

b) Derive the short-run supply equation.

Total cost function

A firm's total cost function is a sum of its fixed and variable costs. Fixed costs are any costs that does not change with output while the variable cost are costs that change with output.

Answer and Explanation: 1

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a) {eq}ATC = \frac{TC}{Q} = \frac{100+10Q-2Q^{2}+q^{3}}{Q} = \frac{100}{Q} + 10 - 2Q + Q^2 \\AFC = \frac{FC}{Q} = \frac{100}{Q} \\AVC =...

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Average Cost Vs. Total Cost: Making Production Decisions in the Short-Run


Chapter 4 / Lesson 8

Learn what the average cost of a firm is and how it differs from total cost. Understand the distinction between short run and long run average total cost.

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