Nokia sells a new budget cell phone. Based on information provided by the accounting department, the average variable cost is: AVC = $20 + Q
The average fixed cost is: AFC = $4,000,000/Q
where Q is the number of phones. The phone sells for $50.
Show your work/thought process:
a. Find the total cost, average cost, and marginal cost equations.
b. At what level of output is average total cost minimized?