The distinction between marginal and average cost can be made with some simple algebra. Here are three total cost functions: i. TC ¼ 10q ii. TC ¼ 40 þ 10q iii. TC ¼ 40 þ 10q a. Explain why all three...

The distinction between marginal and average

cost can be made with some simple algebra. Here

are three total cost functions:

i. TC ¼ 10q

ii. TC ¼ 40 þ 10q

iii. TC ¼ 40 þ 10q

a. Explain why all three of these functions

have the same marginal cost (10).

b. How does average cost compare to marginal cost for these three functions? (Note

that average cost is only meaningful for

q > 4 for function iii.)

c. Explain why average cost approaches

marginal cost for large values of q.

d. Graph the average and marginal cost

curves for these three functions. Explain

the role of the constant term in the

functions.