The market structure of the local pizza industry is best characterised by monopolistic competition. Pizza Shack is one of the producers in the local market.The market demand for Pizza Shack is: Qd = 225 – 10P.Pizza Shack’s cost function is: C(Q) = 0.15Q^2Where Q^2 refers to q squared5. Differentiate the total cost function to find marginal cost: Blank 1. Fill in the blank, read surrounding text.
Question
The market structure of the local pizza industry is best characterised by monopolistic competition. Pizza Shack is one of the producers in the local market.The market demand for Pizza Shack is: Qd = 225 – 10P.Pizza Shack’s cost function is: C(Q) = 0.15Q^2Where Q^2 refers to q squared5. Differentiate the total cost function to find marginal cost: Blank 1. Fill in the blank, read surrounding text.
Solution
To find the marginal cost, we need to take the derivative of the total cost function. The total cost function is given as C(Q) = 0.15Q^2.
The derivative of a function in the form of aX^n, where a is a constant, X is the variable, and n is the power, is given by n*aX^(n-1).
Applying this rule to our cost function, the derivative (which represents the marginal cost) would be:
MC(Q) = 2*0.15Q^(2-1) = 0.3Q
So, the marginal cost function is MC(Q) = 0.3Q.
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