# Answer to Question #35213 in Macroeconomics for Anu

Question #35213

The total cost function of a firm is given by c=x^3 - 5x^2 + 60x,where C is the cost in rupees and X is the number of units produced.

Derive Average cost function.

Derive Average cost function.

Expert's answer

In economics, average cost or unit cost is equal to total cost divided by the number of goods produced (the output quantity, Q). It

is also equal to the sum of average variable costs (total variable costs

divided by Q) plus average fixed costs (total fixed costs divided by Q).

Average costs may be dependent on the time period considered (increasing

production may be expensive or impossible in the short term, for example).

Average costs affect the supply curve and are a fundamental component of supply

and demand.

ATC = TC/Q

ATC = x^2 - 5x + 60

is also equal to the sum of average variable costs (total variable costs

divided by Q) plus average fixed costs (total fixed costs divided by Q).

Average costs may be dependent on the time period considered (increasing

production may be expensive or impossible in the short term, for example).

Average costs affect the supply curve and are a fundamental component of supply

and demand.

ATC = TC/Q

ATC = x^2 - 5x + 60

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