Let AC(q) and MC(q) be the average cost function and the marginal cost function respectively. (a) Show that if AC(q) has a critical point at q = q*, then MC(q*) AC(q*). (b) Use the second derivative test to write down the conditions (in terms of MC(q)) for the average cost function AC(q) being minimized at q = q*.
Let AC(q) and MC(q) be the average cost function and the marginal cost function respectively. (a) Show that if AC(q) has a critical point at q = q*, then MC(q*) AC(q*). (b) Use the second derivative test to write down the conditions (in terms of MC(q)) for the average cost function AC(q) being minimized at q = q*.
Chapter6: Proudction Costs
Section: Chapter Questions
Problem 4SQ
Related questions
Question
Q . B )
Transcribed Image Text:2. .
Let AC(q) and MC(q) be the average cost function and the marginal cost
function respectively.
(a) Show that if AC(q) has a critical point at q = q*, then MC(q*)
AC(q*).
(b) Use the second derivative test to write down the conditions (in terms of
MC(q)) for the average cost function AC(q) being minimized at q = q*.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Microeconomics: Principles & Policy
Economics
ISBN:
9781337794992
Author:
William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:
Cengage Learning
Microeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506893
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning