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Questions and Answers
What is the marginal cost when 8 units are produced?
What is the marginal cost when 8 units are produced?
- Rs 2.0
- Rs 3.0
- Rs 1.0 (correct)
- Rs 0.5
How does the marginal cost function behave as production increases?
How does the marginal cost function behave as production increases?
- It decreases and then increases. (correct)
- It increases continuously.
- It remains constant.
- It decreases continuously.
What is the average cost of production for 8 units?
What is the average cost of production for 8 units?
- Rs 8
- Rs 7
- Rs 6
- Rs 10 (correct)
If the fixed cost increases to Rs 10, what impact does it have on average cost for 8 units?
If the fixed cost increases to Rs 10, what impact does it have on average cost for 8 units?
What is the significance of the term (2x + 9)^(-1/2) in the marginal cost function?
What is the significance of the term (2x + 9)^(-1/2) in the marginal cost function?
Flashcards
Marginal Cost
Marginal Cost
The additional cost incurred by producing one more unit of a product.
Average Cost
Average Cost
The total cost of production divided by the number of units produced.
Fixed Cost
Fixed Cost
A cost that remains constant irrespective of the level of production.
Cost Function
Cost Function
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Finding Total Cost
Finding Total Cost
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Study Notes
Marginal Cost Function
- Marginal cost (MC) is given by the function: MC = 2(2x + 9)-1/2
- x represents the number of units produced.
Average Cost Calculation
- Find the total cost (TC) by integrating the marginal cost function.
- The fixed cost (FC) is Rs 4.
- Calculate the total cost for 8 units of production.
- Average cost (AC) = (TC + FC)/x
- Substitute x = 8 into the formulas to find the average cost for 8 units of production.
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