Suppose a Firm's Total Cost Curve Is TC = Q²

question 175

Essay

Suppose a firm's total cost curve is TC = Q² + Q + 100.
a. Find the firm's marginal cost, average total cost, and average variable cost.
b. Use calculus to find the output level that minimizes average total cost.
c. Show that ATC = MC at this output level.
d. Show that this is the minimum ATC by examining the second derivative.

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Definitions:

Oligopolistic Industry

A market structure characterized by a small number of firms whose decisions affect and are affected by each other, leading to strategic behavior and interdependence.

Optimal Strategy

The best course of action that maximizes benefits or minimizes costs under given circumstances, often used in decision-making and game theory.

Anticipate

To expect or predict something based on current trends or information.

Oligopoly

A market structure characterized by a small number of firms whose decisions about prices and output mutually influence one another.