The cost function for a company is C(x)=2000+96x+4x3/2 where x represents thousands of units. Is there a production level that minimizes average cost?
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Average cost is defined by .
In order to minimise , find such that and
You will find that satisfies these conditions.
Last edited by ignite; Apr 24th 2012 at 02:03 PM.
I'm not sure I understand how to do that. I know its a simple problem I'm just lost.
Differentiating wrt x,
Similarly find and show that it's value at is greater than 0.
If you are new to Differentiation,please read Derivative - Wikipedia, the free encyclopedia
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