General Contents

Detailed Contents

Index

Minimize Average Cost:

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Let the Cost of production, C, depend on the number of units produced, x, according to the equation

total cost equation.

Find the production level which minimizes the Average Cost,
average cost equation.

Since AC depends on only one variable, x, we can differentiate to find the minimum:

derivative of the average cost

Setting this result to 0, we have

, or

equation defining the value of the number of units which minimizes the average cost

Taking the cube root of both sides, we have x = 40 units.

General Contents

Detailed Contents

Index