Suppose that the total short-run cost function of a firm is given by TC = 200 + 20Q, where TC is the total cost and Q is the total quantity of output.

a. What is the firm”s fixed cost?

b. If the firm produces 100 units, what is its average total cost and average variable cost?

c. What is the marginal cost per unit produced if the firm is currently producing 100 units and decides to produce one additional unit?

a) The fixed cost is $200. b) The average total cost = [200 20*100]/100=$20.2 The average variable cost =$20 c) The total…

t increases by 20 if the firm produces one more unit. Thus the marginal cost is $20.