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.1 Given the cost function of a firm as: C = 128 – 6Q + 2Q3 + 3Q2, Compute the following

A. TFC
B. TVC of producing 4 units
C. AVC of producing 4 units
D. ATC of producing 4 units
E. MC of producing the 4th unit

A. clearly, the fixed cost is 128

TVC(q) = 2q^3 + 3q^2 - 6q so evaluate at q=4:
B. TVC(4)
C. TVC(4)/4
D. (TFC+TVC(4))/4
E. MC = d/dq TVC = 6q^2+6q-6 at q=4

Did you know?

Did you know that in economics, various calculations can be made using the cost function of a firm? By analyzing the equation C = 128 – 6Q + 2Q3 + 3Q^2, you can find out important values related to production. For instance, TFC (Total Fixed Cost) represents the cost that remains constant regardless of the quantity produced. TVC (Total Variable Cost) shows the cost that changes depending on the quantity produced, and it can be calculated for a specific quantity like 4 units. AVC (Average Variable Cost) is the variable cost per unit, which can be determined by dividing TVC by the quantity produced. Similarly, ATC (Average Total Cost) refers to the total cost per unit and can be computed by dividing the total cost (C) by the quantity produced. Lastly, MC (Marginal Cost) indicates the additional cost incurred when producing one more unit, so the MC of producing the 4th unit can be calculated. By understanding these concepts and their calculations, individuals can gain valuable insights into a firm's costs and production decisions.