Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form and obtained the following results.Total fixed cost TFC)at Straker Industries is $1,000. If Straker Industries produces 12 units of output,what is estimated total cost TC)?
A)$1,000
B)$1,463
C)$2,348
D)$4,428

Question

Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form  and obtained the following results.Total fixed cost TFC)at Straker Industries is $1,000.  If Straker Industries produces 12 units of output,what is estimated total cost TC)?
A)$1,000 
B)$1,463 
C)$2,348 
D)$4,428

Quizplus · Accepted Answer

Plug in the given values into the U-shaped cost function and solve for the total variable cost (TVC) at 12 units of output:

TVC = 11(12)^2 - 534(12) + 696 - 4(12)^3 + 3(12)^4 = $1,463

Then, add the total fixed cost to the total variable cost to find the estimated total cost:

TC = TFC + TVC = $1,000 + $1,463 = $2,463

Therefore, the best choice is B, with an estimated total cost of $2,463.

Straker Industries Estimated Its Short-Run Costs Using a U-Shaped Average