Question

A small machine shop manufactures drill bits used in the petroleum industry. The manager estimates that the total daily cost (in dollars) of producing X bits is ... CIX) 1,000 25X - 0.13x2 Find the average cost of producing 10 units. (Round to the nearest 2 decimal places, if needed)

Answer 1

Average cost of producing the 10 units:

Equation to estimate cost of 1 unit X is = C(X) = 1000 + 25 X - 0.13 X²

This can be read as for each unit of X, cost includes 1000 Fixed cost and 2 Variable component of 25X and 0.13X²

(Fixed cost remains constant at 1000 irrespective of no of units, but the variable cost increases with increase in the no of units.)

To calculate average cost of 10 units of X we will input values in the equation

C (10 units of X) = 1,000 + 25(10) - 0.13 (10)²

= 1,000+ 250 - 13

=1,237

The average cost of producing 10 units is $1,237.

Answer 2

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