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Cost Function Examples and Analysis

The document provides 4 examples of cost functions, including the total cost (TC), marginal cost (MC), and average cost (AC) functions. Each example gives the equations for TC, MC, and AC and graphs the relationships between quantity (q) and the costs. The examples demonstrate different potential shapes that cost curves can take, including linear, quadratic, and cubic functions of quantity.

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racewill
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7 views3 pages

Cost Function Examples and Analysis

The document provides 4 examples of cost functions, including the total cost (TC), marginal cost (MC), and average cost (AC) functions. Each example gives the equations for TC, MC, and AC and graphs the relationships between quantity (q) and the costs. The examples demonstrate different potential shapes that cost curves can take, including linear, quadratic, and cubic functions of quantity.

Uploaded by

racewill
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Examples of cost function

1) Total cost: T C(q) = 10 + 10q Marginal cost: M C(q) = Average cost: AC(q) =
dT C(q) dq

= 10
10+q+q 2 q 10 q

T C(q) q

10 q

+ 10

where AV C(q) = 10 and AF C(q) =

14 12 10 8 6 4 2 0 2 4 6 8 10 q 12 14 16 18 20

2) Total cost: T C(q) = 10 + q + q 2 Marginal cost: M C(q) = Average cost: AC(q) =


dT C(q) dq

= 1 + 2q
10+q+q 2 q

T C(q) q

10 q

+1+q

where AV C(q) = 1 + q and AF C(q) = 1

10 q

14 12 10 8 6 4 2 0 2 4 6 q 8 10 12

3) Total cost: T C(q) = 10 + 10q 4q 2 + q 3 C(q) Marginal cost: M C(q) = dTdq = 10 8q + 3q 2 Average cost: AC(q) =
T C(q) q

10+10q4q 2 +q 3 q

=
10 q

10 q

where AV C(q) = 10 4q + q 2 and AF C(q) = 14 12 10 8 6 4 2 0 1 2 q 2 3

+ 10 4q + q 2

4) Total cost: T C(q) = 10 + 10q 2


dT C(q) = 20q dq 2 Average cost: AC(q) = T C(q) = 10+10q q q where AV C(q) = 10q and AF C(q) = 10 q

Marginal cost: M C(q) =

10 q

+ 10q

40

30

20

10

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