CA Foundation P4 · Chapter 3 · Question 13 of 15
A firm's short-run total cost function is TC = 500 + 20Q + Q^2. At Q = 10, average variable cost and marginal cost respectively are:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Rs. 30 and Rs. 40
Explanation
TFC = 500, TVC = 20Q + Q^2. At Q = 10, TVC = 200 + 100 = 300, so AVC = 300/10 = Rs. 30. MC = dTC/dQ = 20 + 2Q = 20 + 20 = Rs. 40. Rs. 80 is ATC (TC = 800, 800/10), and Rs. 50 is AFC (500/10).
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