problem set 4 production costs
Complete on sheet attached
1) Based on your knowledge of the definition of the various measures of short-run cost, complete this table.
|
Q |
TC |
TFC |
TVC |
AC |
AFC |
AVC |
MC |
|
0 |
120 |
– |
– |
– |
– |
||
|
1 |
265 |
||||||
|
2 |
264 |
||||||
|
3 |
161 |
2) Consider the following cost equation: Total Cost (TC) = 160Q -10Q2 + 1.2Q3.
- What is Total Cost when the Quantity is 20?
- Which of the following represents the equation for the Average Cost (AC)?
AC = 160 – 10Q + 1.2Q2
AC = 160Q – 10Q + 1.2Q
AC = 80Q – 5Q2 + 0.6Q3
AC = 53.3Q – 3.3Q2 + 0.4Q3
c) What is the Marginal Cost of producing the 21st unit? (Hint: Begin by calculating TC at 20 and at 21.) Round your answer to the nearest whole number.
