BUSINESS: Marginal Average Cost (62 continued) a. Graph the average cost functi...

BUSINESS: Marginal Average Cost (62 continued)

a. Graph the average cost function AC(x) that you found in Exercise 62(a) on the window [0, 50] by [0, 50]. TRACE along the average cost curve to see how the average cost falls as the number of devices increases. Note that although average cost falls, it does so more slowly as the number of units increases.

b. To check your answer to Exercise 62, use the “dy/dx” or SLOPE feature of your calculator to find the slope of the average cost curve at x = 25. This slope gives the rate of change of the cost, which should agree with your answer to Exercise 62(c). Find the slope (rate of change) for other x-values to see that the rate of change of average cost tends toward zero (the law of diminishing returns).

Exercise 62:

BUSINESS: Marginal Average Cost A company can produce computer flash memory devices at a cost of $6 each, while fixed costs are $50 per day. Therefore, the company’s cost function is C(x) = 6x+50.

a. Find the average cost function

b. Find the marginal average cost function MAC(x).

c. Evaluate MAC(x) at x = 25 and interpret your answer.