Solve each inequality and give your answers in interval notation:
1 answer:
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Answer:
a. Average cost equation
b. Q = 112 units
c. Average cost (Q = 112 units) = GHS 5.12
d. Usually, the actual production capacity.
Step-by-step explanation:
We will use $ as the currency symbol for GHS.
a) We have:
- Variable costs: 0.65Q
- Fixed costs: 250
- Special costs: 0.02Q^2
Then we can write the total cost equation as:
The average cost function can be calculated dividing the total cost equation by Q. Then, we have:
b) The output level that minimize the average cost can be calculated deriving the average cost equation and making it equal to zero:
The output level that minimizes cost is Q=112 units.
c. The average cost of production for the output level of 112 is:
d. The limitation is not specified, by this models have a range of Q values where it is valid. These range is usually dependent on the scale of the production. The factory will have a maximum level of production, and over this level, the cost equation is different as other investments are needed.