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Question
The manager of a restaurant found that the cost to produce cups of coffee is , while the cost to produce cups is . Assume the cost is a linear function of , the number of cups produced. Find a formula for . What is the fixed cost? Find the total cost of producing cups. Find the total cost of producing cups. Find the marginal cost of the st cup. What is the marginal cost of any cup and what does this mean to the manager?
Solution
VerifiedAnswered 3 months ago
Answered 3 months ago
Step 1
1 of 2Assume that cost function has form:
To produce 100 cups, cost is . If we put it in the cost function we have:
To produce 400 cups, cost is . If we put it in the cost function we have:
So we need to solve a linear system:
Let's subtract second from the first equation:
So the cost function is
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