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Analyze the short run and long cost functions for the low-calorie microwaveable food company given the cost functions below and suggest substantive ways in which the low-calorie food company may use this information in order to make decisions in both the short-run and the long-run.
Total Cost: TC = 160,000,000 - 115.56Q + 0.01111Q2
Variable Cost: VC = - 115.56Q + 0.01111Q2
Marginal Cost: MC = -115.56 + 0.02222Q
More specifically:
a. Write the equation for the Average Total Cost function (ATC). (Hint: ATC = TC/Q.)
b. Determine the quantity (Q) associated with minimum ATC. (Hint: ATC is minimized when ATC = MC).
c. Determine the minimum value of ATC.
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