suppose the cost to produce some commodity is a linear function of output.find cost as a function of output if costs are rs.4000 for 250units and rs.5000for 350 units are sold?
Answers
Fixed cost is the cost of producing the commodity regardless of the quantity.
Variable cost is the increased in cost of producing 1 unit of the commodity.
Find the variable cost to produce 1 unit:
Cost of 250 units = Rs 4000
Cost of 350 units = Rs 5000
(350 - 250) units = 5000 - 4000
100 units = 1000
1 unit = 1000 ÷ 100
1 unit = Rs 10
Find the variable cost to produce 250 units:
1 unit = Rs 10
250 units = 10 x 250
250 units = Rs 2500
Find the fixed cost:
Total cost to produce 250 units = Rs 4000
Variable cost to produce 250 units = Rs 2500
Fixed cost = 4000 - 2500
Fixed cost = Rs 1500
Form the linear equation:
Let x be the number of units.
Let y be the total cost.
Fixed cost = Rs 1500
Variable cost = Rs 10/unit
The equation is y = 1500 + 10x
Answer: y = 1500 + 10x
Step-by-step explanation:
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