Suppose a firm's total cost is given by TC = 100 + 4Q + 2Q². Which of the following statements is (are) TRUE?
I. AVC = 4Q + 2Q²
II. AFC = 100/Q
III. ATC = 2Q + 4 + 100/Q
IV. FC = 100 + 4Q

Question

Quizplus · Accepted Answer

II. AFC (Average Fixed Cost) = FC/Q. Since FC (Fixed Cost) is 100, AFC = 100/Q.III. ATC (Average Total Cost) = TC/Q. Substituting TC = 100 + 4Q + 2Q = 100 + 6Q, ATC = (100 + 6Q)/Q = 6 + 100/Q, not 2Q + 4 + 100/Q as stated. Therefore, the explanation corrects the mistake in the question's statement, but the selection was based on the options provided.

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