Question: Based on a consulting economist’s report, the total and marginal cost functions for Advanced Electronics, Inc. are

TC= 200 + 5Q – 0.04Q² + 0.001Q³

MC = 5 – 0.08Q + 0.003Q²

The president of the company determines that knowing only these equations is inadequate for decision making. You have been directed to do the following:

a. Determine the level of fixed cost (if any) and equations for average total cost, average variable cost, and average fixed cost.

b. Determine the rate of output that results in minimum average variable cost.

c. If fixed costs increase to $500, what output rate will result in minimum average variable cost?