Find the output that minimizes average cost

Reference no: EM132136770

Problem: Suppose firms cost function is C(q) = 4q ^2 + 16

a) Find variable cost, fixed cost, average cost, average variable cost,and average fixed cost. (Hint: Marginal cost is given by MC = 8q)

b) Show the average cost, marginal cost, and average variable cost curves on a graph.

c) Find the output that minimizes average cost.

d) At what range of prices will the firm produce a positive output? (Hint: MC > AV C)

e) At what range of prices will the firm earn a negative profit? (Hint: include fixed cost.)

f) At what range of prices will the firm earn a positive profit?

Reference no: EM132136770

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