Question

•1) The Short-Run Cost function of a company is given by the equation: TC = 500+80Q2+ 3Q3


where:


TC is the total cost and Q is the total quantity of output, both measured in millions of dollars.


If the company produced 5 units of goods, its average fixed cost is equal?

2)The Short-Run Cost function of a company is given by the equation: TC = 500+80Q2+ 3Q3


where:


TC is the total cost and Q is the total quantity of output, both measured in millions of dollars.



The company’s Fixed Cost is equal to?

3) The Short-Run Cost function of a company is given by the equation: TC = 500+80Q2+ 3Q3


where:


TC is the total cost and Q is the total quantity of output, both measured in millions of dollars.


If the company produced 5 units of goods, its total cost is equal?

4)The Short-Run Cost function of a company is given by the 
equation: TC = 500+80Q2+ 3Q3 
where: TC is the total cost and Q is the total quantity of output, 
both measured in millions of dollars.

If the company produced 5 units of goods, its 
:marginal cost is equal

5)The Short-Run Cost function of a company is given by the 
equation: TC = 500+80Q2+ 3Q3 
where: TC is the total cost and Q is the total quantity of output, 
both measured in millions of dollars.




If the company produced 5 units of goods, its average 
:variable cost is equal

Answer 1

Solution 1	TC = 500 +80Q2+3Q3
	Fixed Cost = 500
	Variable Cost = TC-FC : 1525-500 = 1025
	Average Fixed Cost = Fixed Cost / Variable costs = 500 / 1025 = 0.4878
Solution 2	Fixed cost is same at all level and it is equal to the total cost at Q = 0
	FC=TC=500+(80*0)+(3*0) = 500
	Hence fixed cost is $ 500
Solution 3	TC = 500 +80Q2+3Q3
	Constant part is fixed cost, hence fixed cost = 500
	Quantity is 5
	Total Cost = 500 + 80*(2*5)+3*(3*5*5)
	TC=500+80*(2*5)+3*(3*5*5)=$1525
Solution 4	Total Cost = 500 + 80q2+3q3
	Marginal Cost = 80* (2Q)+3*(3Q2)
	MC at Q = 5
	MC (5) = 80*(2*5)+3*(3*5*5)
	MC = 800+225 = $ 1025
Solution 5	TC = 500 +80Q2+3Q3
	If company produces Q=0, then TC = 500 + 0 +0 ; So fixed cost = 500
	If company produces Q= , then
	TC=500+80*(2*5)+3*(3*5*5)=1525
	Variable Cost = TC-FC : 1525-500 = 1025
	VC per unit = Average VC = 1025 /5 =$ 205