Question

2. If the total cost of producing Q goods is given by TC = Q? + 10 + 16, find the level of output which minimises average cost A. 2 B. 3 C. 4 D. 5

Answer 1

Correct answer: B) 3.

To minimize average cost, we need to find the level of output that minimizes the average of the fixed cost and the variable cost.

From the given equation, the fixed cost is 10 + 16= 26, and the variable cost is Q.

So, we need to find the value of Q that minimizes (26 + Q)/2, which would be B) Q=3.