Help to find the Production level that will minimize the average cost and The minimal average cost (Calculus) ?
Set C'(x) = 0. You'll be able to solve that for x. x is the production level you seek, and C(x) is the minimal average cost. To be on the safe side, you should calculate C''(x) too, and confirm that it is positive, which is what you want if you're looking for a minimum.
What is the production level that will minimize the average cost?
Well if you are looking for the lowest AVERAGE costs, then you first need to set up the AVERAGE cost function, which is the cost function divided by x (number of units): AC = C(x)/x = 250/sqrt(x) + x/274625 Now you set up the first derivative of the average cost function and set it equal to zero and solve for x: AC´(x) = -0.5*x^(-1.5)*250 + 1/274625 AC´(x) = 0 125x^(-1.5) = 1/274625 34,328,125 = x^(1.5) 105,625 = x Note you can write sqrt(x) as x^0.5 If you need more explanation, please contact me. Cheers!
What is the level of production for which the average cost is equal to the marginal cost?
Set the two equations equal to each other, then solve for x. You will be working with a third order equation and end up with at least one imaginary solution. The real results are x=1 and -84.45 Negative production quantities don't make sense, so I am wondering if your problem is expressed correctly. A minus sign in front of each of the "339" terms will make the results realistic. From a practical point of view, which most business training seems to ignore, you can eliminate the x^3 and x^2 terms from the equations as the .000002 coefficient makes these term insignificant. So the following will give you approximate results without the heavy duty math: 4x + 339 = 4 + 339/x x = 1 or -339/4 Again, check your problem statement and verify that you have copied it correctly. Hope this helps.
How does the cost decreases when production increases?
This can be answered by a combination of Economics and Operations knowledge . The production cost involves two components as written belowTotal Cost = Fixed Cost + Variable CostThe total cost can be decreased by Economies of Scale i.e by increasing production . As the number of components produced increases the Fixed cost gets divided over a large number of components , while the variable cost remains the same thus decreasing the Total cost.A simple example as follows :Case 1) Company A produces toys with the following costsFixed Cost = Cost of purchasing Machine = Rs.100000Variable Cost-= Cost of Producing one unit of product = Rs.10/Unit(Labour , electricity etc.. which changes with production )Quantity Produced = 100Total Cost for production for 100 components = Fixed Cost +Variable Cost=Fixed Cost + Variable Cost/Unit *No. of units= 100000+(10*100)=Rs101000Therefore Cost / Unit = Total Cost / Number of Units=101000/100=Rs.1010Case 1) Company B produces toys with the following costsFixed Cost = Cost of purchasing Machine = Rs.100000Variable Cost-= Cost of Producing one unit of product = Rs.10/Unit(Labour , electricity etc.. which changes with production )Quantity Produced = 1000Total Cost for production for 100 components = Fixed Cost +Variable Cost=Fixed Cost + Variable Cost/Unit *No. of units= 100000+(10*1000)=Rs110000Therefore Cost / Unit = Total Cost / Number of Units=110000/1000=Rs.110From the above example it is clear that Company B has a clear advantage due to economies of scale where its per unit cost decreases drastically . This reduction in cost can be used to increase profit margins or pass on the benefit to consumers to make the market more competitive .
Math Problem:Minimizing production Costs:?
The total monthly cost (in dollars) incurred by cannon precision instruments for manufacturing x units of the model MI digital camera is given by the function C(x)= .0025x^2 +80x +10,000 a. Find the average cost function C. b. Find the level of production that results in the smallest average production cost. C. find the level of production for which the average cost is equal to the marginal cost. Please please help! I have been stuck for days and i just dont get it.
How much does it cost to produce a short film in India?
It depends on the script. If you are restricting yourself to one single location, if you or your friends are acting in it and if you shooting with the camera you currently own then the actual expense to produce this film can be literally zero rupees.Don’t get me wrong, you can still make a good film with the resources you have right now. Just focus on the story, performances and the message what you are trying to convey. It’s actually the best way to make your first short film.If your script demands multiple locations, characters, if you are renting high-end cameras and working with professional cast and crew members, the cost will add up. In this case, you will have to take care of the people, hire equipments, pay for locations etc. it can literally go anywhere from ₹ 10k to ₹ 100K or may be more. So no clear answer to this. It depends on the screenplay and your approach.I wouldn’t recommend spending much for your short, specially if it’s your first. Shorts don’t make any money even if gets selected in festivals or you get some kind of distribution. So, keep the production cost low, it’s the ultimate advise. The best way to minimise cost is to strategically play with your story, shoot in one location and work with a few cast and crew members.Remember, you will make mistakes and there will be too many things to handle if the production cost goes high. You idea should be to manage as less people in your first short film so you can maximise your resources and test your ideas with minimum hessle.
What is meant by the output level of minimum efficient scale of a firm?
I like this answerIn industrial organization, the minimum efficient scale (MES) or efficient scale of production is the lowest point where the plant (or firm) can produce such that its long run average costs are minimized.
Microeconomics: Why profit is maximum when Marginal Cost equals Marginal Revenue?
To understand the question, we should take into account a few basics:Marginal Revenue (MR) : is additional revenue that firm gets from the sale of an extra unit of the product.Marginal Cost (MC) : is the additional cost of producing an extra unit of the product.Profit = TR (total revenue) - TC (total cost).The firm is at equilibrium when it produces such units of the output that it gets maximum profits, which happens when MR = MC and MC > MR after the equilibrium level of output.Let’s analyse the question with a Perfectly Competitive firm, where MR = Price:Firm is at equilibrium at E where MR = MC because:Before point E (say point B), MR>MC : the revenue earned by selling an additional unit exceeds the cost of producing it. So, the firm can increase its profits by producing additional units as long as MR>MC.After point E (say point C), MC>MR : the cost of producing an extra unit of output exceeds the revenue that can be earned from its sale, decreasing firm’s profits.Therefore, profit is maximized and equilibrium is achieved at point E on producing Q2 level of output where MR = MC.Our focus remains to maximize the total profits.As long as producing an additional unit of output costs less than the revenue that can be earned by its sale, we will continue to produce more - as it adds to our total profits.When cost of producing an extra unit exceeds the revenue that can be earned by its sale, we would decrease our total profits by producing such units of output.Therefore, we produce such units of output, where MR = MC and get maximum profits.