Question

In: Economics

1. Suppose the total cost equation of a firm is TC(Q)=5,000+2,000Q?10Q2+0.25Q3 Where Q is the level...

1. Suppose the total cost equation of a firm is

TC(Q)=5,000+2,000Q?10Q2+0.25Q3

Where Q is the level of output.

What is the firm’s total fixed cost?

2. What is the equation for the firm’s total variable cost?

3. Calculate the firm's total cost for Q=10.

4. What is the equation for the firm's average total cost? Calculate average total cost for Q=10.

Expert Solution

1. Fixed cost is the total cost when the quantity is zero. So, putting the value of Q as 0 in the equation for TC, we get:

TC = 5,000 + 2,000Q ?10Q² + 0.25Q³ = 5,000 + 2,000*0 ? 10*0 + 0.25*0 = $5,000.

So, total fixed cost = $5,000.

2. Variable cost is the cost which varies with quantity.

Variable cost = total cost - total fixed cost = 5,000 + 2,000Q ? 10Q² + 0.25Q³ - $5,000 = 2,000Q ? 10Q² + 0.25Q³

So, the equation for variable cost = 2,000Q ? 10Q² + 0.25Q³

3. Total cost when Q is 10 = 2,000Q ? 10Q² + 0.25Q³ = 2,000 * 10 - 10 * (10)² + 0.25 * (10)³ = 20,000 - 1,000 + 250 = $19,250.

4. Average total cost = total cost/quantity = (5,000 + 2,000Q ?10Q² + 0.25Q³)/Q = 5,000/Q + 2,000 -10Q + 0.25Q²

The equation for averaget total cost = 5,000/Q + 2,000 -10Q + 0.25Q²

Average total cost when Q is 10 = 5,000/Q + 2,000 -10Q + 0.25Q² = 5,000/10 + 2,000 -10*10 + 0.25*10² = 500 + 2,000 - 100 + 25 = $2425

Rahul Sunny answered 2 years ago

4. Consider a firm with total cost: TC = 200 +2q + 4q2, where q is...

4. Consider a firm with total cost: TC = 200 +2q + 4q2, where q is output. (Decimals OK!) a.[1] Is this a Short Run or a Long Run Total Cost function? Explain how you know. b.[3] Find the equations for Marginal Cost, Average Total Cost and Average Variable Cost. c.[2] What is the minimum efficient scale of production for this firm? d.[1] Over what quantities does this firm exhibit diseconomies of scale? e.[4] If this represents the cost curve...

A firm has the following relationship between output (Q) and total cost (TC): Q TC 0...

A firm has the following relationship between output (Q) and total cost (TC): Q TC 0 $100 1 110 2 130 3 160 4 200 5 250 6 310 7 380 8 460 9 550 10 650 Say the firm is a perfect competitor. If the market price for its product is $ 60, at what output level will this firm produce at (as a profit maximizer)? At the output level in (a), are firms in this industry making a...

Suppose in the short run a perfectly competitive firm has the total cost function: TC(Q)=675 +...

Suppose in the short run a perfectly competitive firm has the total cost function: TC(Q)=675 + 3q2 where q is the firm's quantity of output. If the market price is P=240, how much profit will this firm earn if it maximizes its profit? b) how much profit will this firm make? c) Given your answer to b), what will happen to the market price as we move from the short run to the long run? d) What is the break-even...

Consider a firm with total costs represented by TC=8+1/2Q2 and a corresponding marginal cost of Q(MC=Q)...

Consider a firm with total costs represented by TC=8+1/2Q2 and a corresponding marginal cost of Q(MC=Q) 1) Graph the ATC and MC, be certain to label the lowest point of the ATC Consider that the firm faces a price of $10 2) Find the optimal quantity 3) Using the ATC/MC graph, find and diagram, the total cost, total revenue, and any profit or loss at the optimal quantity.

1. Suppose a firm has the following total cost function: TC = 100 + 4q^2 a....

1. Suppose a firm has the following total cost function: TC = 100 + 4q^2 a. What is the minimum price necessary for the firm to earn profit? You must explain your reasoning and process as to how your found the price you found. b. Below what price will the firm shut down in the short run?

Consider a monopolist with a total cost of TC=9+Q and marginal cost of $1 (MC=1). The...

Consider a monopolist with a total cost of TC=9+Q and marginal cost of $1 (MC=1). The monopolist faces a demand curve of P=11-Q. 1. Graph the monopolist 2. Find price and quantity that the monopolist charges. 3. Find the profit and consumer surplus. 4. Find the deadweight loss to welfare.

Assume that a firm in perfectly competitive industry has the following total cost schedule: Q TC...

Assume that a firm in perfectly competitive industry has the following total cost schedule: Q TC 10 110 15 150 20 180 25 225 30 300 35 385 40 480 Calculate the marginal cost and average cost schedule for the firm. If the prevailing market price is $17 per unit, how many units will be produced and sold? What at the profits per unit? What are the total profits? Is the industry in long-run equilibrium at this price?

2/a/Perfect Competition Firm cost equation: TC = 64 - 4Q + Q2 Market demand: Q =...

2/a/Perfect Competition Firm cost equation: TC = 64 - 4Q + Q2 Market demand: Q = 608 - 4P Solve for how many firms serve the market. Enter as a value. b/Producer surplus is the:? -Area below the market price and above the supply curve -Minimum amount consumers will pay for a good. -Area below the demand curve and above the market price of the good. -Area above the supply curve but below the demand curve. c/If demand is P...

Suppose the demand of the good is P = 10 - Q. A monopolist's total cost is TC = 2 + 4Q.

Suppose the demand of the good is P = 10 - Q. A monopolist's total cost is TC = 2 + 4Q. What's the optimal price and quantity of the monopolist?calculate the monopolist's profit (or loss)also calculate the deadweight loss from monopoly

Consider a perfectly competitive market where each firm’s total cost function is TC = q^3 –...

Consider a perfectly competitive market where each firm’s total cost function is TC = q^3 – 10q^2 + 50q. a) What is the long run equilibrium price and quantity for each firm? b) The industry demand function is Qd=2000-10p. How many firms are there in the industry in the long run? c) The demand has changed to Qd=4000-18p. Describe the industry’s response to the demand shock and calculate the change in the number of firms in the long run equilibrium.