Question
upstudy study bank question image url

Suppose that the total cost function, in dollars, for the production of \( x \) units of a product is given by the equation shown below. \( C(x)=4,410+85 x+0.1 x^{2} \) Find the equation of the average cost function, \( \bar{C}(x) \). \( x=21 \) (a) Find the instantaneous rate of change of average cost with respect to the number of units produced, at any level of production. (b) Find the level of production at which this rate of change equals zero. \( x=21 \) (c) At the value found in part (b), which of the following is true? The average cost function is greater than the total cost function.

Ask by Wilson Macdonald. in the United States
Feb 03,2025

Real Tutor Solution

Tutor-Verified Answer

Answer

The instantaneous rate of change of average cost is \( \frac{d\bar{C}}{dx} = 0.1 - \frac{4,410}{x^{2}} \).

Solution

Let's work through each part of the problem step by step. ### Given: - **Total Cost Function:** \( C(x) = 4,410 + 85x + 0.1x^2 \) ### (a) Find the Instantaneous Rate of Change of the Average Cost Function **Average Cost Function (\( \bar{C}(x) \)):** \[ \bar{C}(x) = \frac{C(x)}{x} = \frac{4,410 + 85x + 0.1x^2}{x} = \frac{4,410}{x} + 85 + 0.1x \] **Instantaneous Rate of Change (\( \frac{d\bar{C}}{dx} \)):** \[ \frac{d\bar{C}}{dx} = \frac{d}{dx}\left( \frac{4,410}{x} + 85 + 0.1x \right) = -\frac{4,410}{x^2} + 0 + 0.1 = 0.1 - \frac{4,410}{x^2} \] ### (b) Find the Level of Production Where the Rate of Change Equals Zero Set the instantaneous rate of change to zero and solve for \( x \): \[ 0.1 - \frac{4,410}{x^2} = 0 \] \[ \frac{4,410}{x^2} = 0.1 \] \[ x^2 = \frac{4,410}{0.1} = 44,100 \] \[ x = \sqrt{44,100} = 210 \] **Thus, the level of production is \( x = 210 \) units.** ### (c) Evaluate the Statement at \( x = 210 \) **Statement:** *At the value found in part (b), the average cost function is greater than the total cost function.* **Analysis:** \[ \bar{C}(x) = \frac{C(x)}{x} \] For \( \bar{C}(x) > C(x) \), it would imply: \[ \frac{C(x)}{x} > C(x) \Rightarrow 1 > x \] However, since \( x = 210 \), which is greater than 1, the inequality \( \bar{C}(x) > C(x) \) **does not hold**. **Conclusion:** The statement is **false**. In reality, for \( x > 1 \), the average cost \( \bar{C}(x) \) is less than the total cost \( C(x) \). ### Summary of Answers: - **(a)** The instantaneous rate of change is \( \frac{d\bar{C}}{dx} = 0.1 - \frac{4,410}{x^2} \). - **(b)** The level of production is \( x = 210 \) units. - **(c)** The statement "**The average cost function is greater than the total cost function**" is **false** at \( x = 210 \). Answer: Problem (a) Answer The instantaneous rate of change of average cost is \( \frac{d\bar{C}}{dx} = 0.1 - \frac{4,\!410}{x^{2}} \).

Reviewed and approved by the UpStudy tutoring team

error msg
Explain
Simplify this solution

Mind Expander

To find the average cost function \( \bar{C}(x) \), you would divide the total cost function \( C(x) \) by the number of units produced \( x \). This results in: \[ \bar{C}(x) = \frac{C(x)}{x} = \frac{4,410 + 85 x + 0.1 x^{2}}{x} = \frac{4,410}{x} + 85 + 0.1 x \] Now for part (a), the instantaneous rate of change of average cost with respect to \( x \) is given by the derivative \( \frac{d\bar{C}}{dx} \). Using calculus, you would get: \[ \frac{d\bar{C}}{dx} = -\frac{4,410}{x^{2}} + 0.1 \] For part (b), setting the derivative to zero to find where the rate of change equals zero: \[ -\frac{4,410}{x^{2}} + 0.1 = 0 \] This simplifies to \( x^{2} = 44,100 \) giving \( x \approx 210 \). Now for part (c), at \( x=210 \), you evaluate \( C(210) \) and \( \bar{C}(210) \). You will find that the average cost is less than the total cost at this level of production. So, contrary to the statement, the average cost function is not greater than the total cost function. A useful historical nugget is that the concepts of cost functions have evolved significantly since the advent of the Industrial Revolution, where such calculations became crucial for maximizing efficiency in production. The application of calculus to economics in the form of marginal cost analysis began to gain popularity in the 19th century, effectively changing the landscape of how businesses operate. In real-world application, companies today still use variations of average cost functions to inform their pricing strategies and budgeting. By understanding average costs versus total costs, businesses can scale production more effectively and improve their profit margins through precise pricing and cost management strategies.

Related Questions

Latest Calculus Questions

Try Premium now!
Try Premium and ask Thoth AI unlimited math questions now!
Maybe later Go Premium
Study can be a real struggle
Why not UpStudy it?
Select your plan below
Premium

You can enjoy

Start now
  • Step-by-step explanations
  • 24/7 expert live tutors
  • Unlimited number of questions
  • No interruptions
  • Full access to Answer and Solution
  • Full Access to PDF Chat, UpStudy Chat, Browsing Chat
Basic

Totally free but limited

  • Limited Solution
Welcome to UpStudy!
Please sign in to continue the Thoth AI Chat journey
Continue with Email
Or continue with
By clicking “Sign in”, you agree to our Terms of Use & Privacy Policy