**Title: Understanding Cost Functions and Marginal Cost Calculation****Cost Function Overview:**Consider a commodity with a cost function given by:\[ C(x) = 90 + x^2 \] This equation represents the total cost $ C(x) $ in dollars to produce $ x $ units of the commodity.**Part (a): Marginal Cost Calculation**To find the marginal cost at $ x = 7 $ units, we need to calculate:\[ MC(7) = \]The marginal cost provides an estimate of the cost of producing one additional unit. **Prediction:**The predicted cost to produce the 8th unit is: \[ \text{\$} \_\_\_\_\_\_\_\_\_\_\_ \]**Part (b): Actual Cost Calculation**Calculate the difference between $ C(8) $ and $ C(7) $ to find the actual cost of producing one additional unit:\[ C(8) - C(7) = \]This calculation gives the actual cost of producing the 8th unit:\[ \text{\$} \_\_\_\_\_\_\_\_\_\_\_ \]**Explanation:**The difference between the predicted and actual costs can highlight inaccuracies in using marginal costs for estimation in non-linear cost functions.

Answer to the question is as follows :

Suppose that the cost function for a commodity is (x) = 90 + x? dollars. (a) Find the marginal cost at x = 7 units. MC(7) Tell what this predicts about the cost of producing 1 additional unit. The cost to produce the 8th unit is predicted to be $ (b) Calculate C(8) - C(7) to find the actual cost of producing 1 additional unit.

Suppose that the cost function for a commodity is (x) = 90 + x? dollars. (a) Find the marginal cost at x = 7 units. MC(7) Tell what this predicts about the cost of producing 1 additional unit. The cost to produce the 8th unit is predicted to be $ (b) Calculate C(8) - C(7) to find the actual cost of producing 1 additional unit.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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