Question

Given a cubic cost function C(Q) = Q³ + Q² + Q + 1, arrange total cost (TC), Marginal Cost (MC), Average Cost (AC), Average Fixed Cost (AFC) in increasing order when Q = 2.
(a) AFC 
(b) TC 
(c) MC 
(d) AC

• A. (A), (B), (C), (D)
• B. (A), (D), (B), (C)
• C. (A), (C), (B), (D)
• D. (C), (B), (D), (A)

Hint:

Compute cost values and arrange.

Answer 1

The Correct Option is B

Given the cost function, we can calculate:

• \(AFC = \frac{FC}{Q}\)
• \(TC = C(Q)\)
• \(MC = \frac{d(TC)}{dQ}\)
• \(AC = \frac{TC}{Q}\)

After calculating the values when \( Q = 2 \), the correct order from smallest to largest is: \(AFC, AC, TC, MC\) 
 Hence, the correct answer is (b).