Consider the following variable cost function (where Q = output):
VC = 200 * Q - 9 * Q^2 + 0.25 * Q^3
Fixed costs are equal to $150: FC = 150
A. Determine the total cost function.
B. Determine the (i) average fixed, (ii) average variable, (iii) average total, and (iv) marginal cost functions.
C. Determine the value of Q where the marginal cost function takes on its minimum value.
A. The total cost function is made up of fixed costs + variable costs. Based on the information provided above: TC (total cost) = FC + VC
TC = 150 + 200 * Q - 9 * Q^2 + 0.25 * Q^3
Average fixed = fixed cost per ...
This solution analyzes the characteristics of cost functions: fixed, variable, average and marginal