Business: Long-Run Average Cost Suppose that a software company produces CDs (computer d...

Business: Long-Run Average Cost Suppose that a software company produces CDs (computer disks) at a cost of $3 each, and fixed costs are $50. The cost function, the total cost of producing x disks, will then be C(x) = 3x+50, and the average cost per unit will be the total cost divided by the number of units:

a. Show that , which is the unit or marginal cost.

b. Sketch the graph of AC(x), showing the horizontal asymptote. [Note: Your graph should be an illustration of the general business principle for linear cost functions: In the long run, average cost approaches marginal cost.]