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:

Question

Quizplus · Accepted Answer

To find the quantity where ATC is minimized, we first need to derive the ATC (Average Total Cost) formula from the given TC (Total Cost) formula. The ATC is found by dividing the TC by Q (quantity). The given TC formula is TC = 1,000 + 100Q - 10Q^2 + Q^3. Dividing each term by Q gives us ATC = 1,000/Q + 100 - 10Q + Q^2. The equation in choice C correctly represents the process of setting the derivative of ATC (which involves the terms 100 - 20Q + 3Q^2) equal to the derived ATC formula, indicating the process of finding the quantity that minimizes ATC.

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