hw1 - S teven Kordvani Business Economics (BUS 247) HW #...

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Steven Kordvani Business Economics (BUS 247) HW # 1-Fall 2008 Prof. Bradbury 1. The follow equation represents the Total Cost Function for a representative Firm: TC= C (q) = 480 + 4q^2 a. Fixed Cost = 480 Variable Cost=4q^2 b. Expression for Average Total Cost =would be TC/q or TC/4q^2 c. Expression for Marginal Cost = 8q (which is the derivative of the variable cost) 2. “Diminishing marginal returns states that a firms short run marginal cost curve will eventually increase.” In a typical marginal cost curve there is upward sloping because at a certain point of expansion, your output you receive for each additional unit you add will start to diminish, however the cost of that additional unit will stay the same and increase at the same. 3. If a firm is experiencing Increasing Returns (economies of scale) which of the following must be true: a. AC/MC > 1 4. TR = pq a. Marginal Revenue in a perfectly competitive market: a) Marginal revenue is the change in average revenue which in this case

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hw1 - S teven Kordvani Business Economics (BUS 247) HW #...

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