(a) Illustrate the relation between Total Cost (TC), Total Fixed Cost

Question

(a) Illustrate the relation between Total Cost (TC), Total Fixed Cost (TFC) and Total Variable Cost (TVC) curves. Also, comment upon the shapes of these curves.

(b) Given a total cost function,

TC(Q) = Q²+ 10Q + 100

where Q represents quantity of output produced.

(i) Find the expressions for the variable cost, fixed cost, average cost, average variable cost, and average fixed cost.

(ii) At what output level (Q) is the average cost lowest? Also find the minimum average cost.

21 Jan 2021

Answer :

Word Count : 526

(a) Relation between Total Cost (TC), Total Fixed Cost (TFC), and Total Variable Cost (TVC) curves:

In microeconomics, the total cost incurred by a firm can be broken down into two components: Total Fixed Cost (TFC) and Total Variable Cost (TVC). The Total Cost (TC) is the sum of these two costs.

1. Total Fixed Cost (TFC):
- TFC represents the cost that does not vary with the level of output. It remains constant regardless of the quantity produced.
- The TFC curve is a horizontal line parallel to the quantity axis, indicating a fixed cost regardless of the level of ______ ______ _______ ______ ________ ____ _____ ____ ______.
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