The total shortrun cost function of a company is given by th

The total short-run cost function of a company is given by the equation C 19053Q, where C is the total cost and Q is the total quantity of output, both measured in tens of thousands. a. What is the company\'s fixed cost? goods, what is its average variable cost? d. What is its average fixed cost? b. If the company produced 100/000 units of c. What is its marginal cost per unit produced? e. Suppose the company borrows money and ex- pands its façtory. Its fixed cost rises by $50,000, but its variable cost falls to $45,000 per 10,000 units. The cost of interest () also enters into the equation. Each one-point increase in the interest rate raises costs by $30,000. Write the new cost equation.

Solution

A.

Fixed cost = 190 (tens of thousand)

B.

Average variable cost = $53

C.

Marginal cost (MC) = dC/dQ = 53

MC = $53

D.

Average fixed cost = 1900000/Q

E.

New equation is :

Cost = 195 + 30000*I + 45Q