For the cubic total cost function TC = a + bQ + cQ² + dQ³,where a = 0,b = 25,c = -10,and d = 1,the firm's average variable cost is minimized at an output of: A)ten. B)five. C)two. D)one.

Question

Quizplus · Accepted Answer

The average variable cost can be calculated as AVC = (b + cQ² + dQ³)/Q. To minimize AVC, we need to find the output level where the derivative of AVC with respect to Q is equal to zero. Taking the derivative and setting it equal to zero, we get: db/dQ + c²/Q² + d³/Q² = 0 Plugging in the values of b, c, and d, we get: 25 - 10²/Q² + ³/Q² = 0 Solving for Q, we get: Q = 5 Therefore, the firm's average variable cost is minimized at an output of 5.

For the Cubic Total Cost Function TC = a