Suppose that total cost is given by TC = 200 + 5Q - 0.4Q² + 0.001Q³

Question

Quizplus · Accepted Answer

The total cost (TC) formula is broken down into fixed and variable components. The fixed cost (FC) is the part that does not change with the quantity produced, which is $200. The variable cost (VC) changes with the quantity produced and is given by the rest of the formula. The average variable cost (AVC) is the variable cost divided by the quantity (Q), which simplifies to the given formula. The marginal cost (MC) is the derivative of the total cost with respect to quantity, which correctly simplifies to the given formula. Therefore, all statements are correct.

Suppose That Total Cost Is Given by TC = 200