Ed's Construction Company Has the Following Short-Run Cost Function: Q³

question 25

Essay

Ed's construction company has the following short-run cost function: q³ - 10q² + 36q.
a.What level of output will minimize the average cost? What is the AC at this point?
b.Does the production process indicate diminishing returns? How can you tell?

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Definitions:

Average Sales

The mean amount of sales over a certain period, calculated by summing all sales figures and dividing by the number of sales transactions.

Critical Value

A point on the scale of the test statistic beyond which we reject the null hypothesis; it marks the threshold for significance in hypothesis testing.

P-value

The odds of receiving outcomes in a test that are equally or more extreme than those observed, given the null hypothesis is assumed to be accurate.

Level of Significance

A threshold in statistical hypothesis testing below which a result is considered statistically significant.