Question

A factory has a linear cost function f(x)= ax+b , where b represents fixed costs and a represents the labor and material costs of making one item, both in thousands of dollars. If property taxes (part of the fixed costs) are decreased by $12,000 per year, what effect does this have on the graph of the cost function?

Answer 1

The graph line will drop down by 12.  meaning your initial cost (without any labor and material costs) goes down by 12, since your unit is in thousands