Minimizing Average Cost Quiz

What is the formula for calculating average cost?

• Total cost divided by the number of items produced

• Total revenue divided by the number of items produced

• Total cost multiplied by the number of items produced

• Total revenue multiplied by the number of items produced

What is the derivative of the average cost function in this example?

• 56x - 8

• 8x - 56

• 56x + 8

• 8x + 56

How do you find the production level that minimizes the average cost?

• Set the second derivative of the average cost function equal to zero

• Set the average cost function equal to zero

• Set the cost function equal to zero

• Set the derivative of the average cost function equal to zero

What does a positive second derivative indicate about the average cost function?

• The function is constant, indicating no change

• The function is linear, indicating no extremum

• The function is concave up, indicating a minimum

• The function is concave down, indicating a maximum

Why might the minimum production level seem significant?

• It could represent a significant number of items depending on the context

• It always represents a large number of items

• It is irrelevant to the cost function

• It is always a small number of items