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Suppose a firm’s cost function is given by: C= 50 + 4q2 a) Find the equations for AFC, AVC and MC. b) If w=$4, what’s the short run production function for this firm?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose a firm’s cost function is given by: C= 50 + 4q2 a) Find the equations for AFC, AVC and MC. b) If w=$4, what’s the short run production function for this firm?

Definition Definition Measure of the cost of production per unit of output, including only variable costs such as wages, materials, and utilities. AVC is calculated by dividing total variable cost by the number of units produced. Understanding average variable cost is important for businesses to make decisions on pricing, production levels, and profitability.

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Step 1: Define AFC, AVC, MC

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Step 2: Find the equation for AFC.

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Step 3: Find the equation for AVC.

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Step 4: Find the equation for MC.

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Step 5: Calculate the short run production function for this firm.

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