Suppose That the Long-Run Total Cost Curve for Each Firm

question 10

Multiple Choice

Suppose that the long-run total cost curve for each firm is given by TC = 1,000 + 100Q - 10Q² + Q³. Also, suppose there is free entry and exit. To find the quantity where ATC is minimized, solve the following equation for Q:

• A) 100 - 20Q + 3Q² = 1,000 + 100Q - 10Q² + Q³.
• B) 100 - 20Q + 3Q² = 100 - 10Q + Q².
• C) 100 - 20Q + 3Q² = 1,000/Q + 100 - 10Q + Q².
• D) 100 - 20Q + 3Q² = 1,000(Q + 100 - 10Q + Q²).

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Definitions:

Delivery Costs

Expenses incurred by a company to transport its goods or services to the customer.

Product Cost

The total cost associated with producing a good, including raw materials, labor, and overhead.

Period Cost

Costs that are not directly tied to the production process and are expensed in the accounting period in which they are incurred.

Insurance Expired

The portion of an insurance premium that has been used up during the policy term, representing a cost for the period.