Cost Function | Defining Total, Fixed, Variable, Average, Marginal
In this example problem, we talk about what the cost function means. The total cost function is defined to be the fixed costs plus the variable costs. The average cost is the total cost divided by the number of items. We think of the marginal cost as meaning the cost to produce one more item or the derivative for our contexts. After defining all of these, we work a problem to answer some questions based on information from a table. We use the table to find the fixed cost, the total variable cost for a given quantity that are produced, and the average variable cost for the same quantity. We then estimate the marginal cost by computing the slopes of secant lines using the table and then taking their average to get a better approximation of the slope of the tangent line that will be equivalent to the derivative or marginal cost.
This video contains examples that are from Business Calculus, 1st ed, by Calaway, Hoffman, Lippman. from the Open Course Library, remixed from Dale Hoffman's Contemporary Calculus text. It was extended by David Lippman to add several additional topics. The text is licensed under the Creative Commons Attribution license. http://creativecommons.org/licenses/b...
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