# (Solved) : Problem 4 Chapter 7 Page 286 Question Given Following Cost Functions Compute Average Cost Q26573040 . . .

Problem 4, Chapter 7, Page 286 Question: You are given thefollowing cost functions. A. Compute the average cost, average, andmanagerial cost for each function. Plot then on a graph. B. In eachcase, indicate the point at which diminishing returns occur. Also,indicate the point of maximum cost cost efficiency. ( i.e the pointof maximum average cost) c. For in funtion discuss the relationshipbetwen marginal cost and average varible cost and betwen marginalcost abd average cost. Also, discuss the relationship betweenaverage varible cost and average cost. First Function: TC = 100 +60Q – 3Q2 +0.1Q3 Average Average Marginal Quantity Fixed CostVariable Cost Total Cost Cost Variable Cost Cost 1 100.0 57 157.1157.1 57.1 57.1 2 100.0 (157.1) 3 100.0 – 4 100.0 – 5 100.0 – 6100.0 – 7 100.0 – 8 100.0 – 9 100.0 – 10 100.0 – 11 100.0 – 12100.0 – 13 100.0 – 14 100.0 – 15 100.0 – 16 100.0 – 17 100.0 – 18100.0 – 19 100.0 – 20 100.0 – 21 100.0 – 22 100.0 – 23 100.0 – 24100.0 – 25 100.0 – 26 100.0 – 27 100.0 – 28 100.0 – 29 100.0 – 30100.0 – Second Function TC = 100 + 60Q + 3Q2 Quantity Fixed CostVariable Cost Total Cost AC AVC MC 1.0 100.0 63.0 163.0 163.0 63.063.0 2.0 100.0 (163.0) 3.0 100.0 – 4.0 100.0 – 5.0 100.0 – 6.0100.0 – 7.0 100.0 – 8.0 100.0 – 9.0 100.0 – 10.0 100.0 – 11.0 100.0- 12.0 100.0 – 13.0 100.0 – 14.0 100.0 – 15.0 100.0 – 16.0 100.0 -17.0 100.0 – 18.0 100.0 – 19.0 100.0 – 20.0 100.0 – 21.0 100.0 -22.0 100.0 – 23.0 100.0 – 24.0 100.0 – 25.0 100.0 – 26.0 100.0 -27.0 100.0 – 28.0 100.0 – 29.0 100.0 – 30.0 100.0 – Third FunctionTotal Cost = 100 + 60Q Quantity FC VC TC AC AVC MC 1.0 100.0 60.0160.0 160.0 60.0 60.0 2.0 100.0 (160.0) 3.0 100.0 – 4.0 100.0 – 5.0100.0 – 6.0 100.0 – 7.0 100.0 – 8.0 100.0 – 9.0 100.0 – 10.0 100.0- 11.0 100.0 – 12.0 100.0 – 13.0 100.0 – 14.0 100.0 – 15.0 100.0 -16.0 100.0 – 17.0 100.0 – 18.0 100.0 – 19.0 100.0 – 20.0 100.0 -21.0 100.0 – 22.0 100.0 – 23.0 100.0 – 24.0 100.0 – 25.0 100.0 -26.0 100.0 – 27.0 100.0 – 28.0 100.0 – 29.0 100.0 – 30.0 100.0