Question

Consider the following total cost function: TC = (2/3)Q^3 - 10Q^2 + 200Q + 50. A) Identify the FC and VC functions. B) Calculate AVC, AFC, ATC, and MC functions. C) Determine the level of output at which AVC reaches the minimum point and the minimum AVC at that level of output.

          Consider the following total cost function: TC = (2/3)Q^3 - 10Q^2 + 200Q + 50.
A) Identify the FC and VC functions.
B) Calculate AVC, AFC, ATC, and MC functions.
C) Determine the level of output at which AVC reaches the minimum point and the minimum AVC at that level of output.
        
Show more…

Added by Laura H.

Principles of Economics
Principles of Economics
Gregory Mankiw 8th Edition
AceChat toggle button
Close icon
Ace pointing down

Please give Ace some feedback

Your feedback will help us improve your experience

Thumb up icon Thumb down icon
Thanks for your feedback!
Profile picture
Consider the following total cost function: TC = (2/3)Q^3 - 10Q^2 + 200Q + 50. A) Identify the FC and VC functions. B) Calculate AVC, AFC, ATC, and MC functions. C) Determine the level of output at which AVC reaches the minimum point and the minimum AVC at that level of output.
Close icon
Play audio
Feedback
Powered by NumerAI
Danielle Fairburn Jennifer Stoner
Kathleen Carty verified

Andrew Davis and 61 other subject Macroeconomics educators are ready to help you.

Ask a new question

*

Labs

-

Want to see this concept in action?

NEW

Explore this concept interactively to see how it behaves as you change inputs.

View Labs

*

Key Concepts

-
Key Concept
Premium Feature
Explore the core concept behind this problem.
Play button
Key Concept
Premium Feature
Explore the core concept behind this problem.
Your browser does not support the video tag.

*

Recommended Videos

-
illustrate-the-relation-between-marginal-cost-mc-average-total-cost-atcaverage-variable-cost-avc-and-average-fixed-cost-afc-curves-given-a-totalcost-functiontcq-7q2-5q-75where-q-represents-q-89666

Illustrate the relation between Marginal Cost (MC), Average Total Cost (ATC), Average Variable Cost (AVC), and Average Fixed Cost (AFC) curves. Given a total cost function, TC(Q) = 7Q^2 + 5Q + 75 where Q represents the quantity of output produced. Find the expression for Variable cost (VC), Fixed cost (FC), AVC, AFC, and ATC.

Lottie A.

question1-a-find-the-first-second-and-third-derivatives-of-the-following-total-cost-function-tcq-q3-8q2-500q-180-b-find-the-average-cost-ac-tcq-and-its-minimum-hint-use-this-link-to-find-the-61092

a. Find the first, second, and third derivatives of the following total cost function: TC(Q) = Q^3 - 8Q^2 + 500Q + 180 b. Find the average cost, AC = TC/Q, and its minimum: [Hint: Use this link to find the minimum value] c. Find the average variable cost, AVC = TVC/Q, and its minimum: d. Show that the marginal cost, MC, curve passes through the minimum of the AC and the AVC curves:

Shaiju T.

question1-a-find-the-first-second-and-third-derivatives-of-the-following-total-cost-function-tcq-q3-8q2-500q-180-b-find-the-average-cost-ac-tcq-and-its-minimum-hint-use-this-link-to-find-the-61092

a. Find the first, second, and third derivatives of the following total cost function: TC(Q) = Q^3 - 8Q^2 + 500Q + 180 b. Find the average cost, AC = TC/Q, and its minimum: [Hint: Use this link to find the minimum value] c. Find the average variable cost, AVC = TVC/Q, and its minimum: d. Show that the marginal cost, MC, curve passes through the minimum of the AC and the AVC curves:

Shaiju T.


*

Recommended Textbooks

-
Principles of Economics

Principles of Economics

Gregory Mankiw 8th Edition
achievement 1,148 solutions
Macroeconomics

Macroeconomics

Glenn Hubbard, Tony O'Brien 6th Edition
achievement 1,986 solutions
Economics

Economics

Michael Parkin 12th Edition
achievement 1,401 solutions

*

Transcript

-
00:01 So here we've got a math -heavy question.
00:02 We're told that total cost is 2 over 3 q cubed minus 10 q squared plus 200 q plus 50.
00:14 So a, right, here's the fixed cost, right? the fixed cost is simply equal to 50 because this is the part that doesn't vary with q, right? the other way you could think about it is put in q equal zero.
00:32 Fixed cost or whatever you have to pay if you shut down production.
00:35 So if you put in q equal zero, only the constant is left.
00:39 And that makes this part the variable cost, right? this is the variable cost because that's all the parts that do vary with q, right? so a, b, relatively straightforward.
00:54 Average variable cost is equal to variable cost divided by q.
01:00 So this will be 2 over 3 q squared minus 10 q plus 200, right? average fixed cost is fixed cost over q is 50 over q.
01:14 Average total cost is more of the same, right? it is total cost over q, which is just a total cost.
01:22 The sum of these two things, right? we're dividing the whole thing by q instead of doing it by parts.
01:30 So there would be average total cost.
01:32 Marginal cost is the one that's more interesting.
01:34 Marginal cost is the derivative of total cost with respect to quantity.
01:39 So now we need to differentiate, right? for the first one, the power three comes down...
Need help? Use Ace
Ace is your personal tutor. It breaks down any question with clear steps so you can learn.
Start Using Ace
Ace is your personal tutor for learning
Step-by-step explanations
Instant summaries
Summarize YouTube videos
Understand textbook images or PDFs
Study tools like quizzes and flashcards
Listen to your notes as a podcast
Continue solving this problem
Create a free account to:
  • View full step-by-step solution
  • Ask follow-up questions with Ace AI
  • Save progress and study later
Continue Free
Numerade

Get step-by-step video solution
from top educators

Continue with Clever
or



By creating an account, you agree to the Terms of Service and Privacy Policy
Already have an account? Log In

A free answer
just for you

Watch the video solution with this free unlock.

Numerade

Log in to watch this video
...and 100,000,000 more!


EMAIL

PASSWORD

OR
Continue with Clever