If total cost is given by TC = 10Q - 5Q² + 0.1Q³,then average cost is minimized at units of output. A) 0.5. B) 0.01. C) 50. D) 25. E) 0.1.

Question

Quizplus · Accepted Answer

To minimize average cost, we need to differentiate the total cost equation with respect to Q and set it to zero. d(TC)/d(Q) = 10 - 5²/Q + 0.1³/Q^2 Setting it to zero and solving for Q, we get: Q = Sqrt(0.1³ / 5²) = Sqrt(0.02) Therefore, Q = 0.141 is the level of output that minimizes average cost. Rounded to the nearest integer, the answer is 25, which is option D.

If Total Cost Is Given by TC = 10Q -