Question

# Please check 1-4 and help with 5-9.

**STC = 550 +9Q -**

** .15Q**^{2}** +0.005Q**^{3}

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**1 Total fixed cost is $__ 550_______**

Fixed cost (FC) is the constant number in the above function

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**2 Obtain the AFC function from (a) and write it here _550/Q________**

** **AFC = FC/Q

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**3 Obtain the AVC function contained in the STC function and write the AVC function here ___ 9 - .15Q + 0.005Q**

^{2}

__________________________** TVC = 9Q - .15Q**^{2}** + 0.005Q**^{3}

^{ }AVC = TVC/Q

AVC = (9Q - .15Q^{2} + 0.005Q^{3}) / Q

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**4 Write here the MC function _ 9 - .3Q + 0.015Q**

^{2}

_______________________MC = dSTC/dQ

MC = d(550 + 9Q - .15Q^{2} + 0.005Q^{3})/dQ

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**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.**

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** 6 Find the value of Q at which AVC is a minimum.**

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**7 Is productive efficiency at this value greatest or least?**

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** 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.**

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**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.**