The following static budget is provided: Units 22,000 Units Sales $ 220,000 Less variable costs: Manufacturing costs $ 77,000 Se
1 answer:
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Answer:
(a) 11
(b) 13
Explanation:
The Total Cost is given in the question as follows:
Total Cost = C(q) = ..................................................... (1)
Average cost (AC(q)) is calculated as Total Cost (C(q)) divided by quantity (q). This can be stated in mathematical equation as follows:
.................... (2)
(a) When q = 2, the value of q which is 2 is substituted for it in equation (2) to obtain Average Cost as follows:
(c) Marginal Cost, MC(q) = C'(q), simply means change in the Total Cost, C(q), as a result of one unit change in the quantity. This can be obtained by differentiating the Total Cost, C(q), with respect to q. Since our Total cost function, C(q), is already given in equation (1) above, we can therefore differentiate it with respect to q and obtain MC(q) = C'(q) as follows:
.................................... (2)
The marginal cost of producing 2 units also implies that q = 2. We therefore 2 for q in equation (2) to obtain marginal cost of producing 2 units as follows:
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