ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question
The average cost function for skateboards is given by:
AC = (15)^2 - 30(15) + 350
= 225 - 450 + 350 = 125.
The average cost at the minimum level of output is $125 per skateboard.
The marginal cost function for skateboards is given by:
MC = 3(15)^2 - 60(15) + 350
= 675 - 900 + 350 = 125
So, at q = 15, MC = AC = 125.
this marginal cost curve intersects average cost at its minimum value.
Draw and label the graph showing the average and marginal cost curves for skateboard production.
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