Consider the following cost function Find the average cost a

Consider the following cost function. Find the average cost and marginal cost functions. Determine the average and marginal cost when x = Interpret the values obtained in part (b). C(x) = 0.03x3 + 0.8x2 + 40x + 100. a = 1000

Solution

a) Average cost function = 0.01x^2 + 0.2x + 20 + 140/x Marginal cost = 0.03x^2 + 0.4x + 20 b) avg cost = 10,220.14, marginal cost = 30,420 c) The average cost is the cost incurred per unit product and it accounts for the fixed cost too. While the marginal cost is the cost of increasing one unit of product.