1) What is the fixed cost, marginal cost, average total cost, average variable cost and average...

1) What is the fixed cost, marginal cost, average total cost, average variable cost and average fixed cost of the following cost function? .

2) What is the level of output that minimizes AVC? (in other words, what is the level of output that corresponds to the minimum of AVC?)

Expert Solution

Answer 1 :

* fixed cost : it is a cost which remain fixed. It does not cahnge by the the increase and decrease in the quantity of goods and services produced by an industry. It must have to paid by business firm.

* Marginal cost: Marginal cost is the cost which incurred by producing an additional unit of output. Change in total cost divided by change in quantity of an output produced by an industry is termed as marginal cost.

* Averege total cost: it is known as average cost . A cost which incurred per unit of an output. Total cost divided by the output produced by a firm is termed as averege cost . It is sum of average variable cost plus averege fixed cost . It has U shaped curve .

Averege fixed cost : it is a cost which is fixed on per unit of output. Total fixed cost divided by quantity of a product produced is termed as averege fixed cost .

* Averege variable cost: it is the cost which incurred on variable inputs. Total variable cost / quantityof output produced is termed as averege variable cost. It can vary with the output level .

Rahul Sunny answered 2 years ago

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