Asked by reddy chittamuru on Jun 23, 2024
Verified
A competitive firm has the short-run cost function
c(y) y3 2y2 5y 6.Write down equations for:
a.The firm's average variable cost function
b.The firm's marginal cost function
c.At what level of output is average variable cost minimized?
d.Graph the short-run supply function for this firm, being careful to label the key points on the graph with the numbers specifying the exact prices and quantities at these points.
Average Variable Cost
The total variable cost divided by the quantity of output produced; it represents the variable cost per unit of output.
Marginal Cost
The incremental cost associated with the production of an additional unit of a product or service.
- Comprehend the principles of short-term and long-term cost functions within economic theory.
- Determine the marginal and average costs using specified cost functions.
- Ascertain the best output level to lower expenses or increase earnings.
Verified Answer
GG
George GhazalaJun 28, 2024
Final Answer :
a.y2 2y 5.
b.3y2 4y 5.
c.y 1.
d.The AVC curve is U-shaped with its bottom at y 1,c 2.The marginal cost curve is also U-shaped.It bottoms out at y 2/3 and crosses the AVC curve from below at y 1.
b.3y2 4y 5.
c.y 1.
d.The AVC curve is U-shaped with its bottom at y 1,c 2.The marginal cost curve is also U-shaped.It bottoms out at y 2/3 and crosses the AVC curve from below at y 1.
Learning Objectives
- Comprehend the principles of short-term and long-term cost functions within economic theory.
- Determine the marginal and average costs using specified cost functions.
- Ascertain the best output level to lower expenses or increase earnings.