Question

How do you calculate the minimum cost?

Answer 1

We can use derivative to find minimum cot by following steps

1) First find out total cost C(x) = fixed cost + variable cost [ here x is the number of unit produced ]

2) find critical points of C(x)

For critical points we need to find  differentiation of C(x) i.e. C'(x)

At critical point ether C'(x) equal to zero i.e. C '(x) = 0 or C'(x) is undefine ( i.e. denominator of C'(x) is zero )

values of x comes for C'(x) or C'(x) undefine are known as critical points of C(x)

3 ) Then check second derivative of C(x) i.e. C ''(x) is positive or negative at critical points If C''(x) >0 then that gives minimum value of C(x) and if C''(x) <0 then that give maximum value of C(x)

To find minimum cost put value of x at which C" (x) comes positive in C(x) . that gives minimum cost