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Cost Function: Fixed, Variable, and Total Costs

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38. An economist estimated that the cost function of a single-product firm is:

C(Q) = 60 + 30Q + 25Q2 + 5Q3.

Based on this information, determine the following:

a. The fixed cost of producing 10 units of output.

$

b. The variable cost of producing 10 units of output.

$

c. The total cost of producing 10 units of output.

$

d. The average fixed cost of producing 10 units of output.

$

e. The average variable cost of producing 10 units of output.

$

f. The average total cost of producing 10 units of output.

$

g. The marginal cost when Q = 10.

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Solution Preview

a) The fixed cost (FC) of producing 10 units of output is $60 since the the amount Q produced has no effect on cost. It is the constant term (the first term on the right hand side of the equation).

b) The variable cost of ...

Solution Summary

This solution gives calculations for fixed cost, variable cost, and total cost.

$2.19