The cost function is given as C(Q) = Q^2 +100
Fixed cost is the minimum cost to be incurred irrespective of the number of units that are being produced. In the expression for C(Q), the fixed component, one that is not dependent on the value of Q, is 100. The...
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The cost function is given as C(Q) = Q^2 +100
Fixed cost is the minimum cost to be incurred irrespective of the number of units that are being produced. In the expression for C(Q), the fixed component, one that is not dependent on the value of Q, is 100. The variable cost is the component of the total cost that is dependent on the number of units being produced. In C(Q), the component Q^2 varies for different values of Q, this is the variable component.
The average fixed cost function is Cf(Q) = 100 and the average variable cost function is Cv(Q) = Q^2.