Question #05 The short-run cost function of a company is given by the equation TC=200+55q, where TC is the total cost and q is the total quantity of output, both measured in thousands. a) What is the company's fixed cost? b) If the company produced 100,000 units of goods, what would be its average variable cost? c) What would be its marginal cost of production? d) What would be its average fixed cost? e) Suppose the company borrows money and expands its factory. Its fixed cost rises by $50,000, but its variable cost falls to $45,000 per 1000 units. The cost of interest (i) also enters into the equation. Each 1-point increase in the interest rate raises costs by $3000. Write the new cost equation.

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Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.