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Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder
Edition 12ISBN: 978-1133189022Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder
Edition 12ISBN: 978-1133189022 Exercise 3
The distinction between marginal and average cost can be made with some simple algebra. Here are three total cost functions:
i. TC = 10q
ii. TC = 40 + 10q
iii. TC = -40 + 10q
a. Explain why all three of these functions have the same marginal cost (10).
b. How does average cost compare to marginal cost for these three functions? (Note that average cost is only meaningful for q 4 for function iii.)c. Explain why average cost approaches marginal cost for large values of q.
d. Graph the average and marginal cost curves for these three functions. Explain the role of the constant term in the functions.
i. TC = 10q
ii. TC = 40 + 10q
iii. TC = -40 + 10q
a. Explain why all three of these functions have the same marginal cost (10).
b. How does average cost compare to marginal cost for these three functions? (Note that average cost is only meaningful for q 4 for function iii.)c. Explain why average cost approaches marginal cost for large values of q.
d. Graph the average and marginal cost curves for these three functions. Explain the role of the constant term in the functions.
Explanation
Verified
Verified
The given total cost functions are:
i) 
...
Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder
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