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Calculating Average Cost and Marginal Cost

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Calculating Average Cost and Marginal Cost

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Questions and Answers

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?

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?

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?

<p>Average cost increases. (D)</p> Signup and view all the answers

What is the significance of the term (2x + 9)^(-1/2) in the marginal cost function?

<p>It indicates diminishing returns. (C)</p> Signup and view all the answers

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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Description

This quiz focuses on the marginal cost function and its integration to find total cost. You will learn how to calculate the average cost for a specific number of units produced, incorporating fixed costs. Prepare to apply your understanding of cost functions in practical scenarios.