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Economics - Microeconomics

The following questions refer to a firm, whose manager recently estimated its average variable cost (AVC) function to be

AVC = 88 - 0.026Q + 0.000003Q2

The firm faces total fixed costs (TFC) of $300,000.

a. What is the marginal cost of the firm equal to (in dollar terms) when output is 6,000 units?

b. What is the firm's total cost equal to when output is 6,000 units?

Solution Preview

TVC = AVC * Q = (88 - 0.026Q + 0.000003Q^2) * Q = 88Q - 0.026Q^2 + 0.000003Q^3

TFC = 300000

TC = TVC + TFC = ...

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