STC 190 17Q – 2Q 2 8Q 3 a Total fixed cost is $_________
b Obtain the AFC function from (a) and write it here: _____________
c Obtain the AVC function contained in the STC function and write the
AVC function here _________________________
d Write here the MC function __________________________ e Find the value which AFC approaches as Q gets very large
Also write a sentence or two explaining what this implies for fixed costs
per unit (AFC) as production quantities get ever larger f Find the value of Q at which AVC is a minimum g Is productive efficiency at the value in (f) greatest or least? h 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
c) and also into MC (see d) the two outcomes should be the
same if
SMC crosses AVC at this level of Q i 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
SRCosts1doc