If a company has a cost curve of TC = 300 + 2Q + Q² and it produces 300 units per day, then its average (total) cost is: A) $1.00. B) $303. C) $300. D) $602.

Question

Quizplus · Accepted Answer

To find the average total cost, we need to divide the total cost (TC) by the number of units produced (Q). Therefore, the equation for the average total cost is:
ATC = TC/Q

Plugging in the values for TC and Q, we get:
ATC = (300 + 2(300) + (300^2)(1)(2)(1)(1) + 2(1)(0))/300
ATC = (300 + 600 + 180,000)/300
ATC = 600 + 600
ATC = $1,200/300
ATC = $4

Therefore, the correct answer is B) $303, which is the closest option to $4.

If a Company Has a Cost Curve of TC =