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Production and Cost

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a) Discuss the relationship existing between production and cost.

b) If a Total Cost function is given as: TC = 20,000 + 0.50Q + 0.025Q^2. Interpret the function by explaining what part constitute a fixed cost and what part constitutes variable cost.

c) What is the MC function of the above TC function?

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This solution is comprised of a detailed explanation to answer the relationship existing between production and cost.

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a) Discuss the relationship existing between production and cost

The Production and Costs are different ways to look at the same problem that the company faces that is to maximize profits. As more products are produced, the cost per unit will also be reduced until a certain point that the average cost will begin to increase. The company can maximize profits by trying to find the optimal point of ...

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