posted by hiten
Teddy Bear, Inc., a rapidly growing manufacturer of high fashion children's shoes, plans to open a new production facility in Gastonia. Based on information provided by the accounting department, the company estimates fixed costs of $250,000 per year. Its average variable cost is
AVC = $5 + $0.0001 Q
AVC is average variable cost in dollars and Q is pairs of shoes.
a. Find the total cost and average cost equations.
b. At what level of output is average total cost minimized? What is average total cost at that level of output?