3. (a) Given the total cost function C = 2Q³ − 3Q² + 400Q + 5000 Calculate the average variable cost, average fixed cost and marginal cost functions. Show them graphically. (b) Prove that whenever the marginal cost function is below the average cost function, the average cost function is decreasing; and when the MC function is above the AC function, the AC function is increasing. -

Managerial Economics: A Problem Solving Approach
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ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter7: Economies Of Scale And Scope
Section: Chapter Questions
Problem 11MC
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3.
(a)
Given the total cost function C
=
2Q³ - 3Q² + 400Q + 5000
Calculate the average variable cost, average fixed cost and marginal cost functions.
Show them graphically.
(b)
Prove that whenever the marginal cost function is below the average cost function,
the average cost function is decreasing; and when the MC function is above the AC
function, the AC function is increasing.
Transcribed Image Text:3. (a) Given the total cost function C = 2Q³ - 3Q² + 400Q + 5000 Calculate the average variable cost, average fixed cost and marginal cost functions. Show them graphically. (b) Prove that whenever the marginal cost function is below the average cost function, the average cost function is decreasing; and when the MC function is above the AC function, the AC function is increasing.
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