1. Suppose a cost function is defined as C(q) = 8 + 13q + 15q^2 (a) Find the ATC, AVC, AFC and MC (b) Find the minimum of the ATC and plot the functions found in (a) (c) Give an intuitive explanation for the shape of the ATC, MC and explain the relationship between both cost functions.

1. Suppose a cost function is defined as C(q) = 8 + 13q + 15q^2 (a) Find the ATC, AVC, AFC and MC (b) Find the minimum of the ATC and plot the functions found in (a) (c) Give an intuitive explanation for the shape of the ATC, MC and explain the relationship between both cost functions.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Proudction Costs

Section: Chapter Questions

Problem 8SQ

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Question

1. Suppose a cost function is defined as
C(q) = 8 + 13q + 15q^2

(a) Find the ATC, AVC, AFC and MC
(b) Find the minimum of the ATC and plot the functions found in (a)
(c) Give an intuitive explanation for the shape of the ATC, MC and explain the relationship
between both cost functions.

Definition Definition Measure of the cost of production per unit of output, including only variable costs such as wages, materials, and utilities. AVC is calculated by dividing total variable cost by the number of units produced. Understanding average variable cost is important for businesses to make decisions on pricing, production levels, and profitability.

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