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October 17th, 2014, 04:15 PM   #1
Joined: Sep 2013

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Microeconomics - Cost function

Can some one explain the results a bit more than the solutions manual does on this particular question ?

Exercise 2.3
Consider the following structure of the cost function: C(w,0) =0,
$\displaystyle C_{q}$(w,q) = int(q) where int(x) is the smallest integer greater than or equal to x. Sketch total, average and marginal cost curves.

From the question the cost function is given by:

$\displaystyle C(q,w)=kq-k+1,k-1< q\leqslant k,k=1,2,3...$

so that average cost is

$\displaystyle k+\frac{1-k}{q},k-1< q \leqslant k,k=1,2,3....$

See Figure 2.6.

I don't know how to copy in pictures on the figure ...
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