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    Optimal output level by marginal cost minimization

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    A firm has determined that its variable costs are given by the following relationship:

    VC = .05Q3 - 5Q2 + 500Q
    where Q is the quantity of output produced.

    Determine the output level where marginal costs are minimized.




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    Solution Preview

    VC = .05Q3 - 5Q2 + 500Q , marginal cost is the incremental change in variable cost

    Marginal cost function is obtained by ...

    Solution Summary

    First order derivative approach used to derive optimal quantity by minimizing marginal cost function