Suppose a Firm's Total Cost Function Is Given by TC

question 148

Essay

Suppose a firm's total cost function is given by TC = 6,000 + 2Q + 0.25Q², where MC = 2 + 0.5Q.
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a. What is the output level that minimizes total cost?
b. What is the output level that minimizes average total cost?

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Definitions:

Price Level

The overall level of prices of goods and services in an economy at a given time, often measured by a price index.

Nominal Interest Rate

The stated rate of interest on a financial instrument, not accounting for the compounding effect or inflation.

Inflation Rate

The elevation in the percentage cost of goods and services across an economy over an established period.

Relative-price Variability

Fluctuations in the price of one good or service in relation to others, affecting purchasing decisions and economic equilibrium.