The total cost C for a manufacturer during a given time period is a function of the number N of items produced during that period. To determine a formula for the total cost, we need to know two things. The first is the manufacturer's fixed costs. This amount covers expenses such as plant maintenance and insurance, and it is the same no matter how many items are produced. The second thing we need to know is the cost for each unit produced, which is called the variable cost. Suppose that a manufacturer of widgets has fixed costs of $1000 per month and that the variable cost is $20 per widget (so it costs $20 to produce 1 widget). (a) Explain why the function giving the total monthly cost C, in dollars, of this widget manufacturer in terms of the number N of widgets produced in a month is linear. C always increases by $20 when N increases by . Therefore, C has a constant rate of change and so is a linear function of N. Identify the slope and initial value of this function. slope initial value %24 Write down a formula. C(N) = (b) Another widget manufacturer has variable cost of $12 per widget, and the total cost is $3300 when 150 widgets are produced in a month. What are the fixed costs for this manufacturer?

The total cost C for a manufacturer during a given time period is a function of the number N of items produced during that period. To determine a formula for the total cost, we need to know two things. The first is the manufacturer's fixed costs. This amount covers expenses such as plant maintenance and insurance, and it is the same no matter how many items are produced. The second thing we need to know is the cost for each unit produced, which is called the variable cost. Suppose that a manufacturer of widgets has fixed costs of $1000 per month and that the variable cost is $20 per widget (so it costs $20 to produce 1 widget). (a) Explain why the function giving the total monthly cost C, in dollars, of this widget manufacturer in terms of the number N of widgets produced in a month is linear. C always increases by $20 when N increases by . Therefore, C has a constant rate of change and so is a linear function of N. Identify the slope and initial value of this function. slope initial value %24 Write down a formula. C(N) = (b) Another widget manufacturer has variable cost of $12 per widget, and the total cost is $3300 when 150 widgets are produced in a month. What are the fixed costs for this manufacturer?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 5E

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The total cost C for a manufacturer during a given time period is a function of the number N of items produced during that period. To determine a formula for the total cost, we need to know two things. The first is the manufacturer's fixed costs. This amount covers expenses such as plant maintenance and insurance, and it is the same no matter how many items are produced. The second thing we need to know is the cost for each unit produced, which is called the variable cost.Suppose that a manufacturer of widgets has fixed costs of $1000 per month and that the variable cost is $20 per widget (so it costs $20 to produce 1 widget). Explain why the function giving the total monthly cost C, in dollars, of this widget manufacturer in terms of the number N of widgets produced in a month is linear. C always increases by $20 when N increases by ______. Therefore, C has a constant rate of change and so is a linear function of N. Identify the slope and initial value of this function. slope…
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