Question: Suppose that Bob's Donuts has a total cost function given by TC = Q3 - 6Q2 + 14Q + 5. Find the quantity that minimizes

Suppose that Bob's Donuts has a total cost function given by TC = Q3 - 6Q2 + 14Q + 5. Find the quantity that minimizes average variable costs for Bob's Donuts. Demonstrate that average variable cost is equal to marginal cost at this quantity.

Step by Step Solution

★★★★★

3.32 Rating (170 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Bobs Donuts has fixed cost of 5 and variable cost given by VC Q 3 6 Q 2 14Q Then aver... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

720-B-E-D-S (1628).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

Candy's Tortilla Company has a total cost function given by TC = Q + 4Q + 9. a. What are Candy's average total cost, average variable cost, and marginal cost? b. Find the quantity that minimizes ATC....

Suppose that a competitive firm has a total cost function C(q) = 450 + 15q + 2q2 and a marginal cost function MC(q) = 15 + 4q. If the market price is P = $115 per unit, find the level of output...

A firm produces a product in a competitive industry and has a total cost function C = 50 + 4q + 2q2 and a marginal cost function MC = 4 + 4q. At the given market price of $20, the firm is producing 5...

Suppose a bakery produces cakes with the total cost function given by: TC = 112 +10q +7q2. If the bakery is a price taker and can sell a cake at a price of $80 each. Calculate the profit the bakery...

(15 marks) Suppose in a duopoly market there are two firms, 1 and 2, each with a cost function given as TC 1 = 10Q 1 and TC 2 = 10Q 2 .The inverse demand in the market is P = 100 - 2(Q 1 + Q 2 ). The...

Lesson 3 Assignment Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The main difference between the short run and the long run is that:...

Solve these questions Figure 1. The headquarters of OPEC in Vienna, Austria[1] The Organization of Petroleum Exporting Countries is an example of an international cartel. The organization was created...

Problem 1 Suppose Madison Gas and Electric (MGE) is a natural monopoly in Madison for electricity. This rm faces a demand function P = 20 -2Q and has a total cost function TC = 12+SQ. a. What is this...

MANAGERIAL ECON. Reasoning. Express your thoughts base on the problem indicated below. You can explain your answer in words or in mathematical form. 1.Suppose you buy an accessory that will be used...

:Help me answer the following. Suppose there are two types of used cars: peaches and lemons. A peach is worth $3000 to a buyer and $1900 to a seller. A lemon, on the other hand, is worth $1000 to a...

DiCenta Corporation reported net income of $270,000 in 2010 and had 50,000 ordinary shares outstanding throughout the year. Also outstanding all year were 5,000 shares of cumulative preference...

Help making Trial Balance sheet. TB= trial balance The Adjusted TB totals should be $242,594.58 (Dr & Cr) The Post Closing TB totals should be $90,073.68 (Dr & Cr) You should balance to a Net Income...

Tends to smooth out the erratic changes in costs. Results in the highest cost of goods sold. Mimics the actual flow of inventory for most businesses. Cost of goods sold approximates its current cost....

15. Define Type I error, and its relationship to the level of significance of a test.

1. Your savings account pays 4 percent per year: Each $100 in the bank grows to $104 over a one-year period. If prices increase by 3 percent per year, by keeping $100 in the bank for a year you...

8, An agreement giving the corporation the option to repurchase a bond at a specified price prior to maturity is called a a. Sinking fund b. Collateral payment account. c. Deed in trust account d....

A stock has FCFF of $5.04 and interest per share of $1.1. Their beginning long-term debt was $4.54 per share and their ending long-term debt was $4.83 per share. If their tax rate is 24.8%, then what...

You buy a share of The Ludwig Corporation stock for $19.90. You expect it to pay dividends of $1.07, $1.16, and $1.2576 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of...