New answers tagged cost-functions
1
I assume that the firm is a monopolist.
We know the inverse demand function, the fixed costs and the marginal costs:
$P(q) = 20 - q$
$MC(q) = 12$
$F = 16$
As the marginal costs are constant, we can compute the total costs function as:
$TC(q) = MC\cdot q + F = 12 q + 16$
The average total costs is obtained by dividing by $q$:
$AC(q) = \frac{TC(q)}{q} = ...
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