Question

In: Economics

Exercise 4. A publisher for textbooks has a total cost of TC(Q) = 25,000 − 50Q...

Exercise 4. A publisher for textbooks has a total cost of TC(Q) = 25,000 − 50Q + 15Q^2.

a) Find the publisher’s marginal cost, average cost, average variable cost, and average fixed cost.

b) Find the value of Q for where the marginal cost curve crosses the average cost curve and average variable cost curve.

c) Find the output elasticity ε_TC,Q

Expert Solution

TC = 25000-50Q+ 15Q²

a) MC = -50+ 30Q

AC = TC/ Q = 25,000/Q - 50 + 15Q

AC = AFC + AVC

AFC = -50

AVC = 25,000/Q + 15Q

b) MC = AC

-50+30Q = 25,000/Q -50 + 15Q

15 Q² = 25,000

Q = 40.82

MC = AVC

-50+ 30Q = 25,000/Q + 15Q

-50Q +15Q² = 25,000

15Q² -50Q -25,000 = 0

c) Output elasticity = {dTC/dQ}*{Q/TC}

= (-50+30Q)*{Q/(25,000-50Q+15Q²)}

= (-50+30Q)/(25,000/Q -50 + 15Q)

Rahul Sunny answered 2 years ago

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