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car dealer buys cars from a supplier, and resells them. The cars he buys are currently his only input (and output). He pays his supplier
car dealer buys cars from a supplier, and resells them. The cars he buys are currently his only input (and output). He pays his supplier $C for every car that he buys. (a) Write down the cost function for this car dealer; specifically, his cost of obtaining y cars to resell. The function will include y, and maybe another variable. (b) Find the average cost of buying y cars for resale. It will have at least one variable in it. (c) Find the marginal cost when he buys y cars for resale. It will have at least one variable in it. (d) To boost demand for his cars, the dealer decides to spend an amount of money $A on advertising. He will still need to pay $C for each car he wants to resell. Find his new cost (including advertising) of having y cars to resell, his new average cost of having y cars to resell, and his new marginal cost when he has y cars to resell. Each will be a function of at least one variable. (e) Graph the average cost function, when C = 20 and A = 100
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