The short-run cost function of a firm is as follows: TC = 200 + 5Q + 2Q2 Where TC = Total Cost, Q = Physical units of the product of the firm What would be the level of optimum output ?

The correct answer is B.

The optimum output is the level of output at which the marginal cost is equal to the average cost. In this case, the marginal cost function is $MC = 5 + 4Q$ and the average cost function is $AC = 200/Q + 5 + 2Q$. Setting the marginal cost equal to the average cost, we get $5 + 4Q = 200/Q + 5 + 2Q$. Solving for $Q$, we get $Q = 10$.

Option A is incorrect because the marginal cost is still decreasing at $Q = 5$. Option C is incorrect because the marginal cost is greater than the average cost at $Q = 12$. Option D is incorrect because the marginal cost is still increasing at $Q = 15$.