The market for sweet potatoes consists of 1,000 identical firms. Each firm has a short-run total cost curve of STC = 100 + 100 q + 100q², and a short-run marginal cost curve of SMC=100+200q, where q is output. What is the equation of the firm's average variable cost curve?

Question

Quizplus · Accepted Answer

The average variable cost (AVC) is derived from the total variable cost (TVC), which is the total cost minus fixed cost. Here, TVC = 100q + 100q^2, so AVC = TVC/q = 100 + 100q.

The Market for Sweet Potatoes Consists of 1,000 Identical Firms AVC=100/q+100+100qA V C = 100 / q + 100 + 100 qAVC=100/q+100+100q

The Market for Sweet Potatoes Consists of 1,000 Identical Firms $A V C = 100 / q + 100 + 100 q$