Suppose that,in the long run,a dairy's variable costs are (where Q is the number of gallons of milk produced each day),its marginal cost is and there is an avoidable fixed cost of $50 per day.In the long run there is free entry into the market.What is the dairy's total cost function?

Question

Suppose that,in the long run,a dairy's variable costs are  (where Q is the number of gallons of milk produced each day),its marginal cost is  and there is an avoidable fixed cost of $50 per day.In the long run there is free entry into the market.What is the dairy's total cost function?

Quizplus · Accepted Answer

In the long run, the total cost function can be written as TC = FC + VC, where FC is the fixed cost and VC is the variable cost. The avoidable fixed cost of $50 per day is the FC. The variable cost is given as 11ea8a01_e40c_67f1_8b44_0935beb15d28_TB1639_11. Therefore, the total cost function becomes:

TC = 50 + 11ea8a01_e40c_67f1_8b44_0935beb15d28_TB1639_11

Taking the derivative of the total cost function with respect to Q gives the marginal cost:

MC = d(TC)/d(Q) = 11ea8a01_e40c_8f02_8b44_cff744df4b13_TB1639_11

Therefore, the best choice is (C), which matches the above calculation.

Suppose That,in the Long Run,a Dairy's Variable Costs Are