Average marginal cost function
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(a) Based on this information, will the graph of this firm's average and marginal cost function look like figure 8.1(e)?
TC(X) is quadratic function and MC is linear;
AC(X) = 10,000,000/X + 50 + X/16000, which is convex.
Therefore, Figure 8.4 shows the graph of the cost functions.
(b) The firm's AC function is:
AC(X) = 10,000,000/X + 50 + X/16000
Set AC = MC, or
10,000,000/X + 50 + X/16000 = 50 + ...
Average marginal cost function is applied and the details are presented in the solution.