Question

Assume that the following has a linear cost function with a fixed cost of $ 650, marginal cost per item of $ 12, and the item sells for $ 25. Find the following:

The cost function

Answer 1

The cost function C(x) can be expressed as the sum of the fixed cost ($650) and the product of the marginal cost per item ($12) and the quantity of items (x).

The cost function for this problem is C(x) = 650 + 12X

C(x) = Fixed Cost + Marginal Cost x Quantity

Given:

Fixed cost = $650

Marginal cost = $12

Quantity = X

Cost function = C(x)

C(x) = 650 + (12 x X)

C(x) = 650 + 12X

The linear cost function for the given scenario is C(x) = 650 + 12X