Explore BrainMass
Share

# decreasing, constant and increasing marginal cost

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

The economist for the Grand Corporation has estimated the company's cost function, using the times series data to be
TC=50+16Q-2Q2+0.2Q3

a. Plot this curve for quanties 1 to 10
b. Calculate the average total cost, average variable cost and marginal cost for these quantities, and plot them on another graph.
c. Discuss your results in terms of decreasing, constant and increasing marginal cost. Does Grand cost function illustrate all theses.

https://brainmass.com/economics/microeconomics/decreasing-constant-and-increasing-marginal-cost-166935

#### Solution Summary

Discuss effects of decreasing, constant and increasing marginal costs.

\$2.19

## Fixed Cost & Effect of Output Increase/Decrease

The IT and finance departments of a firm report the values in the following table. The firm produces 20 units of output.

Average Total Cost=30 Average Variable Cost=20 Marginal Cost=27 Price=23 Marginal Revenue=18
a. What is total fixed cost?
b. What happens to profit if output increases slightly?
i. Increase
ii. Decrease
iii. Remain constant
iv. Impossible to tell

c. What happens to average total cost if output increases slightly?
i. Increase
ii. Decrease
iii. Remain constant
iv. Impossible to tell

d. What happens to average variable cost if output increases slightly?
i. Increase
ii. Decrease
iii. Remain constant
iv. Impossible to tell

e. What happens to marginal cost if output increases slightly?
i. Increase
ii. Decrease
iii. Remain constant
iv. Impossible to tell

f. What happens to profit if the firm shuts down in the short run and reduces output to zero?
i. Increase
ii. Decrease
iii. Remain constant
iv. Impossible to tell

View Full Posting Details