Question

Ed's construction company has the following short-run cost function: 4q³− 90q² + 17q. For what quantity is average cost at its lowest?

Answer 1

To find the quantity at which average cost is lowest, differentiate the short-run cost function with respect to quantity and set the derivative equal to zero. Solve the resulting quadratic equation to find the quantity where average cost is minimum.

Step-by-step explanation:

In order to find the quantity at which average cost is lowest, we need to differentiate the short-run cost function with respect to quantity and set the derivative equal to zero. The short-run cost function is given as 4q³ - 90q² + 17q. To find when the derivative is zero, we differentiate the cost function to obtain 12q² - 180q + 17 = 0. We can then solve this quadratic equation to find the values of q, and the value of q where average cost is lowest is the solution that yields the minimum average cost.