Engineering Board Exam Reviewer · Cost Concepts and Economic Quantities · medium

The total cost of producing x units is TC=5,000+20x+0.05x2 pesos. Find the production level that minimizes the average cost per unit.

1. 100 units
2. 200 units
3. 316.23 units
4. 500 units

Answer

C. 316.23 units

Solution

AC= 5,000x+20+0.05x. d(AC)/dx=- 5,000x2+0.05=0 x2=100,000 x 316.23 units.

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