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    The marginal cost function

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    A competitive firm estimates its average variable cost function to be . AVC=125-.21Q+.0007Q^2(squared)
    The firm's total fixed cost is $3,500.
    a. The marginal cost function associated with this average variable cost function is
    SMC =__________________________.
    b. AVC reaches its minimum at ______ units of output. Minimum AVC is _________.
    c. Suppose the price of the product is P = $125. The firm should produce _________ units of output. The
    firm earns a profit (loss) of __________________.
    d. Suppose the price of the product is P = $115. The firm should now produce _________ units of output.
    Its profit (loss) will be _________.
    e. Suppose the price of the product falls to P = $100. The firm should produce _________ units of output.
    Its profit (loss) will be ____________.

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    https://brainmass.com/economics/output-and-costs/the-marginal-cost-function-320809

    Solution Preview

    Please see the attached file.

    A competitive firm estimates its average variable cost function to be .
    AVC=125-.21Q+.0007Q^2(squared)

    The firm's total fixed cost is $3,500.
    a. The marginal cost function associated with this average variable cost function is
    SMC =__________________________.

    a. The firm's total cost, TC = TFC +TVC

    Or, TC = TFC + AVC.Q

    Or, TC =3500 + (125 -0.21Q+ 0.0007Q2).Q

    MC = d(TC)/dQ = 125 - 0.42Q + 0.0021Q2

    b. AVC reaches its minimum at __150____ units of output. Minimum AVC is ___109.25______.

    d(AVC)/dQ = o when AVC ...

    Solution Summary

    The marginal cost function is examined.

    $2.19