Suppose a firm's short run total cost curve can be expressed as $S T C ( Q ) = 50 Q + 10$. This firm's short-run average total cost curve can be expressed as:
A) $50 + \frac { 10 } { Q }$.
B) $50 Q$.
C) 50 .
D) 10 .

Question

Quizplus · Accepted Answer

To find the short-run average total cost curve from the short-run total cost curve, we divide by Q, the quantity of output. So, the short-run average total cost curve is given by: $S R A T C ( Q ) =\frac{ S T C(Q) }{ Q }=\frac { 50 Q+10 }{ Q }=50 +\frac{ 10 }{ Q }$. Therefore, the correct choice is A. The short-run average total cost (SATC) is the total cost (TC) divided by the quantity produced (Q). Therefore, SATC = TC/Q. 
Using the given short run total cost (STC) equation, we can find TC by subtracting the fixed cost (10) from STC. So, TC = STC - 10 = 50Q. 
Substituting this into the SATC equation, we get SATC = 50Q/Q + 10/Q = 50 + 10/Q = 50 + (10/Q).
Therefore, the correct expression for the short-run average total cost curve is A) $50 + \frac { 10 } { Q }$.

Suppose a Firm's Short Run Total Cost Curve Can Be STC(Q)=50Q+10S T C ( Q ) = 50 Q + 10STC(Q)=50Q+10

Suppose a Firm's Short Run Total Cost Curve Can Be $S T C ( Q ) = 50 Q + 10$