Question:

Consider the following equations/functions:

TC = 20 + 4Q TC = 20 + 2Q + 0.5Q2 TC = 20 + 4Q - 0.1Q2

Calculate the following for all three cost equations/functions:

Total cost

Total fixed cost

Total variable cost

Average total cost

Average fixed cost

Average variable cost

Marginal cost

Plot these curves on graphs.

Compare the shapes of these curves and discuss their characteristics. (Particularly interesting is the marginal cost function, which is also often found in engineering cost studies.)

Show all of your work (how you arrived at the answers). You may plot your answers using a computer software application such as Excel or SPSS. Save your file.