1.4 Problem Set 1 - 4
1.4 Problem Set 1 - 4
Problem Set 1 – 4
Text: G. D. Prichett & J. C. Saber
Solutions: Muhammad Shamim
Mark (T) for true or (F) for false. (Assume that cost means factory
cost.) Given that total cost, y, of making x units is y = 5x + 10:
1 ( ) The total cost of making 20 units is $110.
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Linear Equations & Functions (Problem Set 1 – 4)
Explanation: Variable cost is homogenously related to number of units
made. So the variable cost per unit increases as the number of units made
increases.
9 ( ) The marginal cost of every unit is the same.
Solution: The statement is true (T).
Explanation: We know, marginal cost per unit is always constant. So
the marginal cost of every unit is the same for any amount of units made.
10 ( ) The slope of the line is the variable cost per unit.
Solution: The statement is true (T).
Explanation: We know, marginal cost per unit and average cost per unit
are the same concept, and we also know that marginal cost per unit and
slope of the line are the same concept. So the slope of the line is same to
the variable cost per unit.
11 If the total factory cost, y, of making x units of a product is given
by y = 3x + 20, and if 50 units are made:
(a) What is the variable cost?
(b) What is the total cost?
(c) What is the variable cost per unit?
(d) What is the average cost per unit?
(e) What is the marginal cost of the 50th unit?
Solution: Given Total cost, y = 3x + 20
(a) When x = 50, variable cost = 3x = 3(50) = 150 (Ans)
(d) When x = 50, average cost per unit = 170/50 = 3.40 (Ans)
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Linear Equations & Functions (Problem Set 1 – 4)
(c) Fixed cost = 2500 (Ans)
15 In Figure A (on the text book page 52), the slant line represents
the relation between total factory cost, C, of producing a number of
units, and the number of units, Q, produced. What line segment(s),
or ratios thereof, represent:
(a) Fixed cost?
(b) Total cost if OA units are made?
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Bowen, Prichett & Saber’s Mathematics Manual
(c) Variable cost if OA units are made?
(d) Variable cost per unit made?
(e) Average cost per unit if OA units are made?
(f) Fixed cost per unit if OA units are made?
(g) How many more units can be made for AD dollars than for
AF dollars?
(h) Marginal cost?
Solution:
(a) Fixed cost = AB
(b) Total cost for OA units are made = AD
(c) Variable cost for OA units are made = BD
(d) Variable cost per unit made = BD/OA
(e) Average cost per unit for OA units are made = AD/OA
(f) Fixed cost for OA units are made = AB/OA
(g) Numbers of unit can be made for AD dollars than for AF dollars =
EB
(h) Marginal cost = BD/OA
Solution:
(a) OR = Fixed cost.
(b) PN = Variable cost for OM units are made.
(c) PN/OM = Variable cost per unit.
(d) MN/OM = Average cost for OM units are made.
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