Answer:
(d) To study the variations of the CM (Cost of Marginal) function on the interval [10, 90], we would need additional information about the specific cost function being considered. The CM function represents the additional cost incurred by producing one additional unit of output. By examining the CM function over the given interval, we can analyze how the cost changes as the quantity of output increases.
However, without the specific cost function or additional information, it is not possible to provide a detailed analysis of the variations of the CM function on the interval [10, 90].
(e) The variations in the average cost function can be explained using economic arguments. The average cost function represents the cost per unit of output and is influenced by various factors, such as economies of scale, input prices, technology, and production efficiency.
Economies of scale refer to the cost advantages that arise from increasing the scale of production. When output increases, the average cost may decrease due to spreading fixed costs over a larger quantity of output. This is known as economies of scale, where the cost per unit decreases as production volume increases.
Input prices also play a role in determining the average cost. If input prices increase, the average cost will likely increase as well. Conversely, if input prices decrease, the average cost may decrease.
Technological advancements and improvements in production processes can also impact the average cost. More efficient production methods can lead to cost reductions and lower average costs.
Overall, variations in the average cost function are influenced by economies of scale, input prices, technological advancements, and other factors that affect production efficiency.
(f) Determining the quantity of soup produced at which the average cost is minimum involves finding the point of technical optimum. The technical optimum refers to the quantity of output where the average cost is at its lowest point.
To find the technical optimum, we would need the specific cost function and additional information about the production process, such as the relationship between the quantity of soup produced and the associated costs.
By analyzing the cost function and calculating the average cost for different quantities of soup produced, we can identify the quantity at which the average cost reaches its minimum value. This point represents the technical optimum, indicating the most efficient level of production in terms of cost.
Without the specific cost function and additional information, it is not possible to determine the quantity of soup produced at which the average cost is minimum or identify the technical optimum.
Explanation: