1. The total cost function of a firm is TC = Q3 - 40 Q 2+ 14000 Q

Question:

a. How many units of goods must be produced so that the average cost (AC) is a minimum level?

b. What is the minimum Total Cost (TC) and Average Cost (AC)?

c. Prove that at the minimum AC, the magnitude of AC = MC

2. If the company operates in the short term it already has Fixed Costs of 20 million Average Variable Costs AVC = 2/3 Q2 -8 Q + 28 Market Demand Function Q = 10 - 2 P

The company wants to gain maximum profit or minimum loss.

Question:

a. At what level of output is the maximum profit / minimum loss achieved?

b. How much profit will the company earn?