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For each cost function in Figure 4.62, is there a value of q at which average cost is

Chapter 4, Problem 1

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QUESTION:

For each cost function in Figure 4.62, is there a value of q at which average cost is minimized? If so, approximately where? Explain your answer.

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QUESTION:

For each cost function in Figure 4.62, is there a value of q at which average cost is minimized? If so, approximately where? Explain your answer.

ANSWER:

Step 1 of 4

(a)

Consider the below graph of the function.

Picture 1

Step 2 of 4

From the graph the graph is concave down; the average cost gets smaller as quantity increases.

The cost per item gets smaller as quantity increases.

The average cost at q is the slope of the line going through the origin and the point (q, C(q)).

Picture 2

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