Question
A manufacturing company has the following total cost function C(Q) = 100 + 10Q + Q2 Please answer the following questions noting that costs are
A manufacturing company has the following total cost function C(Q) = 100 + 10Q + Q2
Please answer the following questions noting that costs are measured in thousands of dollars and output is measured in thousands of units (i.e. 1 unit of output when substituted will be represented as 1,000 units of output and $1 when calculated represents = $1,000).
a. What is the average fixed cost of producing 2 units of output?
b. What is the average variable cost of producing 2 units of output
c. What is the marginal cost of producing 2 units of output
d. What is the average total cost of producing 2 units of output
e. Describe the relationship observed among the costs calculated in parts (a),(b) and ( c). Does the relationship usually exist among these three types of average costs, please comment on what is usually observed?
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