Question: PRODUCTION COSTS The graph of a typical total cost function C(x) associated with the manufacture of x units of a certain commodity is shown in the following figure.
a. Explain why the function C is always increasing.
b. As the level of production x increases, the cost/unit drops so that C(x) increases but at a slower pace. However, a level of production is soon reached at which the cost/unit begins to increase dramatically (due to a shortage of raw material, overtime, breakdown of machinery due to excessive stress and strain) so that C(x) continues to increase at a faster pace. Use the graph of C to find the approximate level of production x0 where this occurs.
