Question

(15 pts) A firm has the following relationship between output (Q) and total cost (TC): Q...

  1. (15 pts) A firm has the following relationship between output (Q) and total cost (TC):

Q

TC

0

$ 100

1

120

2

160

3

220

4

300

5

400

6

520

7

660

8

820

9

1000

10

1200

  1. What is average total cost at Q = 2?
  1. What is average variable cost at Q = 7?
  1. What is marginal cost at Q = 7?
  1. Is the firm operating under increasing or diminishing returns at Q = 7? Why?

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