Please explain step by step. 1. PRODUCTION COSTS The graph of a typical total cost func-tion C(x) associated with the manufacture of x units of acertain commodity is shown in the figure.a. Explain why the function C is always increasing.b. As the level of production x increases, the cost perunit drops so that C(x) increases but at a slower pace.However, a level of production is soon reached atwhich the cost per unit begins to increase dramatically(owing to a shortage of raw material, overtime, break-down of machinery due to excessive stress and strain),so C(x) continues to increase at a faster pace. Use thegraph of C to find the approximate level of productionXo where this occurs.gnibnoggesnosto 190 orh gi nousini to iconUTLA y ($)y = C(x)(1) 1001101001RO nidniged od e> x (thousands)12 3 4 5 67 8

Cost is defined as the monetary value of all goods and services produced by the producers and…

Answered: PRODUCTION COSTS The graph of a typical…

PRODUCTION COSTS The graph of a typical total cost func- tion C(x) associated with the manufacture of x units of a certain commodity is shown in the figure. a. Explain why the function Cio u

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section: Chapter Questions

Problem 3PA

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Question

Please explain step by step.

1. PRODUCTION COSTS The graph of a typical total cost func-
tion C(x) associated with the manufacture of x units of a
certain commodity is shown in the figure.
a. Explain why the function C is always increasing.
b. As the level of production x increases, the cost per
unit drops so that C(x) increases but at a slower pace.
However, a level of production is soon reached at
which the cost per unit begins to increase dramatically
(owing to a shortage of raw material, overtime, break-
down of machinery due to excessive stress and strain),
so C(x) continues to increase at a faster pace. Use the
graph of C to find the approximate level of production
Xo where this occurs.
gnibnog
gesnos
to 190 orh gi nousini to i
conUTL
A y ($)
y = C(x)
(1) 1001
101
001
RO nidniged od e
> x (thousands)
1
2 3 4 5 67 8

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