Question

# The Deering Manufacturing Company’s short- run average cost function in 2012 was AC = 3 + 4Q Where AC is the

firm’s average cost (in dollars per pound of the product), and Q is its output rate.

a) Obtain an equation for the firm’s short- run total cost function.

b) Does the firm have any fixed costs? Explain.

c) If the price of the Deering Manufacturing Company’s product (per pound) is $3, is the firm making profit or loss? Explain.

d) Derive an equation for the firm’s marginal cost function.

Microeconomics