Use the function below (whose parameters qualify it as a STC function) to answer the questions. See the text p. 244 for a representative figure. STC =400 + 50 Q -5Q? + 2Q3 a. Total fixed cost is $ b. Obtain the AFC function from (a) and write it here c. Obtain the AVC function contained in the STC function and write the AVC function here d. Write here the MC function e. Find the value which AFC approaches as Q gets very large. Also write a sentence or two explaining what this implies for fixed costs per unit (AFC) as production quantities get ever larger. f. Find the value of Q at which AVC is a minimum.| g. Is productive efficiency at the value in (f) greatest or least? h. Demonstrate that the value of SMC equals the value of AVC at the value of Q where AVC is a minimum. Hint: The level of Q you found in (f) is where AVC is a minimum. If you plug this level of Q into AVC (see c) and also into MC (see d) the two outcomes should be the same if SMC crosses AVC at this level of Q. i. Why does the derivative of Short Run Total Cost (STC) equal the derivative of Total Variable Cost (TVC)? Stated another way, why does dSTC/dQ = dTVC/dQ? Explain in a couple of sentences (Hint: See Truett page 235 and footnote 16). j. Find the value of Q where increasing returns ceases and diminishing returns begins. Hint: Diminishing returns begins at the level of Q where MC is a minimum.would bring This nonobjectivity of the implicit cost figures bothers some accountants and Pportunity The private costs is the main reason that such figures are not generally acceptable in financial a firm include all of statements for use by stockholders or investors. Still, if implicit costs are pos the costs of resource use, both explicit itive, actual economic costs for a firm will be larger than accounting costs and implicit, the therefore, economic profit generally will be smaller than accounting profit firm must bear to produce its output. Thus, the inclusion of implicit costs is important for managerial decision making by a firm's owner(s) because it helps the owner(s) to better under. The social costs of a firm are the private stand the economic implications of the demands that the firm is placing on P costs of the er all resources. resources that the We will now briefly consider the other cost items listed at the beginning firm uses plus any ar additional costs Fixed costs are costs of the chapter. Fixed costs are those costs that are fixed in the short run and imposed on society in that do not vary by the firm's inc with the level of operation. firm output in the short run. cus Table 6-1 John and Ruth's Deli Statement of Economic Profit for Month Ended July 31, 2000 firm Total Revenue (Sales) $140,000 Less Cost of Goods Sold 60,000 Gross Profit $ 80,000 CO Less Operating Expenses 50,000 Operating (Accounting) Net Income $ 30,000 Once Less inputs Implicit Rental Income $ 5,400 put. A Implicit Salary Income 12,000 Implicit Interest Income 18,000 tion fu Economic Profit 600 $ 12,000 Figure (at poin derived