Marginal Cost and Average Cost Concepts

This video tutorial covers the concepts of cost functions, including total, average, and marginal costs. It demonstrates how to calculate these costs for producing 200 units and explains the significance of marginal cost. The tutorial also explores how to find the production level that minimizes average cost and verifies this minimum by comparing costs at different production levels.

What is the given cost function in the video?

• c(x) = 1500 + 10x + 0.02x^2

• c(x) = 1500 + 5x + 0.02x^2

• c(x) = 1500 + 10x + 0.01x^2

• c(x) = 1500 + 5x + 0.01x^2

How is the total cost calculated for producing 200 units?

• By adding 200 to the cost function

• By substituting x = 200 in the cost function

• By multiplying the cost function by 200

• By dividing the cost function by 200

What is the average cost per unit for producing 200 units?

• $9.00

• $29.00

• $14.50

• $12.75

How is the marginal cost determined?

• By taking the first derivative of the cost function

• By taking the second derivative of the cost function

• By adding a constant to the cost function

• By subtracting a constant from the cost function

What does the marginal cost represent?

• The additional cost to produce one more unit

• The total cost of producing all units

• The fixed cost of production

• The average cost of producing all units

What condition minimizes the average cost?

• When marginal cost equals average cost

• When total cost is less than average cost

• When total cost equals average cost

• When marginal cost is greater than average cost

What is the production level that minimizes the average cost?

• 387 units

• 200 units

• 420 units

• 350 units

How is the minimum average cost verified?

• By comparing average costs at production levels below and above 387 units

• By calculating the total cost at 387 units

• By dividing the total cost by 387

• By finding the marginal cost at 387 units

What is the minimum average cost found in the video?

• $12.79

• $14.50

• $12.77

• $12.75

What is the significance of the production level 387 in the context of average cost?

• It is the level where total cost is maximized

• It is the level where marginal cost is minimized

• It is the level where fixed cost is minimized

• It is the level where average cost is minimized