Determine the level of production that minimizes the average cost if the cost function is . Round answer to nearest whole number.
A) 16 units
B) 20 units
C) 25 units
D) 27 units

Question

Determine the level of production that minimizes the average cost if the cost function is  . Round answer to nearest whole number.
A) 16 units 
B) 20 units 
C) 25 units 
D) 27 units

Quizplus · Accepted Answer

To minimize average cost, we need to find the minimum point of the cost function, which is the derivative equaling to 0.
Taking the derivative of the cost function:
C'(x) = 33 - 0.004x^2
Setting it to 0:
33 - 0.004x^2 = 0
Solving for x:
x = sqrt(33/0.004) = 25.8
Rounding to the nearest whole number, the level of production that minimizes the average cost is 25 units. Therefore, the correct answer is C.

Determine the Level of Production That Minimizes the Average Cost