: Based on consulting economist’s report, th total and marginal cost functions for Advanced Electronics, Inc. are
TC = 200 + 5Q – 0.04Q2 + 0.001Q3
MC = 5 – 0.08Q + 0.003Q2
The president of the company determines that knowing only these equations is inadequate for decision making. You have been directed to do the following:
a. Determine the level of fixed cost (if any) and equations for average total cost.
b. Determine the rate of output that results in minimum average variable cost
If fixed costs increase to $500, what output rate will result in minimum average variable cost