Suppose a cost function is TC = Aq³ + bq² + cq +d. Then the average total cost is A)Aq² + bq + cq +d/q B)Aq² + bq + c C)Aq³ + bq²+ cq D)d

Question

Quizplus · Accepted Answer

The formula for average total cost is Total Cost (TC) divided by the quantity produced (q). Therefore, we can simplify the given cost function by dividing it by q: TC/q = Aq² + bq¹ + cq/q + d/q The last term, d/q, can be written as a constant cost per unit. Therefore, the average total cost is: ATC = Aq² + bq¹/q + cq/q + d/q Simplifying the second term further, we get: ATC = Aq² + bq² + cq/q + d/q Combining the constant terms, we finally get: ATC = Aq² + bq + cq/q + d/q Therefore, the correct answer is (A).

Suppose a Cost Function Is TC = Aq3 + Bq2

Suppose a Cost Function Is TC = Aq³ + Bq²