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Question

It costs a company $30,000 to begin production of a good, plus$3 for every unit of the good produced. Let x be the number of units produced by the company.

(a) Find a formula for C(x)C(x), the total cost for the production of xx units of the good.

(b) Find a formula for the company's average cost per unit, a(x)a(x).

(c) Graph y=a(x)y=a(x) for 0<x50,000,0y100<x \leq 50,000,0 \leq y \leq 10. Label the horizontal asymptote.

(d) Explain in economic terms why the graph of aa has the long-run behavior that it does.

(e) Explain in economic terms why the graph of aa has the vertical asymptote that it does.

(f) Find a formula for a1(y)a^{-1}(y). Give an economic interpretation of a1(y)a^{-1}(y).

(g) The company makes a profit if the average cost of its good is less than $5\$ 5 per unit. Find the minimum number of units the company can produce and make a profit.

Solution

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Answered 1 year ago
Answered 1 year ago
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(a)

The total cost ) = (variable cost) + (fixed cost). The variable cost varies with xx, the number of units produced.

C(x)=3x+30,000C(x)=3x+30,000

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