92
introduction to mathematical economics
FIGURE 2.21 Improving on the estimate of the value of the area under a curve by “squeezing” DQ. As noted, A and TC(Q) can differ only by the value of some arbitrary constant c, which in this case is TFC. Consider, now, the area under the marginal cost curve from Q1 to Q3. The total cost of production over that interval is TC = Ú
Q3
Q1
MC (Q)dQ = TVC (Q) + TFC
(2.102)
Problem 2.10. Suppose that a firm’s the marginal cost function is MC(x) = 50x + 600. a. Find the total cost function if total fixed cost is $4,000. b. What is the firm’s total cost of producing 5 units of output? c. What is the firm’s total cost of producing from 2 to 5 units of output? Solution a. ÚMC(x)dx = Ú(50x + 600)dx = TVC (Q) + TFC = 25x 2 + 600 x + 4, 000 = TC (x) b. TC(x) = 25(5)2 + 600(5) + 4,000 = 625 + 3,000 + 4,000 = $7,624 c. TC52 = Ú52 (50x + 600)dx 5
[
] + 600(5) + 4, 000] - [25(2) 2
= Ú 25(5) + 600(5) + 4, 000 2
[
= 25(5)
2
2
+ 600(2) + 4 , 000
]
= (625 + 3, 000 + 4, 000) - (100 + 1, 200 + 4, 000) = $7, 625 - $5, 300 + $2, 325
CHAPTER REVIEW Economic and business relationships may be represented in a variety of ways, including tables, charts, graphs, and algebraic expressions. These rela-
