Please check 1-4 and help with 5-9.
STC = 550 +9Q - .15Q
1 Total fixed cost is $__550_______
Fixed cost (FC) is the constant number in the above function
2 Obtain the AFC function from (a) and write it here _550/Q________
AFC = FC/Q
3 Obtain the AVC function contained in the STC function and write the AVC function here ___9 - .15Q + 0.005Q2______________________
TVC = 9Q - .15Q2 + 0.005Q3
AVC = TVC/Q
AVC = (9Q - .15Q2 + 0.005Q3) / Q
4 Write here the MC function _ 9 - .3Q + 0.015Q2___________________
MC = dSTC/dQ
MC = d(550 + 9Q - .15Q2 + 0.005Q3)/dQ
5 Find the value which AFC approaches as Q gets very large.
And does this implies for fixed costs per unit (AFC) as production quantities get ever larger.
6 Find the value of Q at which AVC is a minimum.
7 Is productive efficiency at this value greatest or least?
8 Demonstrate that the value of SMC equals the value of AVC at the value of Q where AVC is a minimum. Hint: The level of Q you found in (f) is where AVC is a minimum. If you plug this level of Q into AVC (see 3) and also into MC (see 4) the two outcomes should be the same if SMC crosses AVC at this level of Q.
9 Find the value of Q where increasing returns ceases and diminishing returns begins. Hint: Diminishing returns begins at the level of Q where MC is a minimum.