Question

Custom Office makes a line of executive desks. It is estimated that the total cost for making x units of their Senior Executive model is represented by the following function, where C(x) is measured in dollars/year.

C(x) = 95x + 230000
(a) Find the average cost function C.
C(x) = 1

(b) Find the marginal average cost function C '.
C '(x) =2

(c) What happens to C(x) when x is very large?
lim_(x->infinity) C(x) = 3

Answer 1

(a) The average cost function is
`\bar{C}(x)=95+(230000)/(x)`

(b) The marginal average cost function is
`\bar{C}'(x)=-(230000)/(x^2)`

(c) The average cost approaches to 95 if the production level is very high.

Explanation:

(a) Suppose
`C(x)` is a total cost function. Then the average cost function, denoted by
`\bar{C}(x)`, is

`(C(x))/(x)`

We know that the total cost for making x units of their Senior Executive model is given by the function

`C(x) = 95x + 230000`

The average cost function is

`\bar{C}(x)=(C(x))/(x)=(95x + 230000)/(x) \\\bar{C}(x)=95+(230000)/(x)`

(b) The derivative
`\bar{C}'(x)` of the average cost function, called the marginal average cost function, measures the rate of change of the average cost function with respect to the number of units produced.

The marginal average cost function is

`\bar{C}'(x)=(d)/(dx)\left(95+(230000)/(x)\right)\\\\\mathrm{Apply\:the\:Sum/Difference\:Rule}:\quad \left(f\pm g\right)'=f\:'\pm g\\\\(d)/(dx)\left(95\right)+(d)/(dx)\left((230000)/(x)\right)\\\\\bar{C}'(x)=-(230000)/(x^2)`

(c) The average cost approaches to 95 if the production level is very high.

`\lim_(x \to \infty) (\bar{C}(x))=\lim_(x \to \infty) (95+(230000)/(x))\\\\\lim _(x\to a)\left[f\left(x\right)\pm g\left(x\right)\right]=\lim _(x\to a)f\left(x\right)\pm \lim _(x\to a)g\left(x\right)\\\\=\lim _(x\to \infty \:)\left(95\right)+\lim _(x\to \infty \:)\left((230000)/(x)\right)\\\\\lim _(x\to a)c=c\\\lim _(x\to \infty \:)\left(95\right)=95\\\\\mathrm{Apply\:Infinity\:Property:}\:\lim _(x\to \infty )\left((c)/(x^a)\right)=0\\\lim_(x \to \infty) ((230000)/(x) )=0`

`\lim_(x \to \infty) (\bar{C}(x))=\lim_(x \to \infty) (95+(230000)/(x))= 95`