Question
The Zip & Lock Company manufactures commercial zippers of two kinds, kind X and kind Y. Its production department estimates the average-cost function of the
The Zip & Lock Company manufactures commercial zippers of two kinds, kind X and kind Y. Its production department estimates the average-cost function of the firm:
A.The manager of the firm would want to know the level of output of zipper X and zipper Y at which the average cost of the firm is minimized and the level of this minimum average cost. (10 points)
B.The firm expects an order of both zippers that will require to produce a total output of 6 units of both kinds of zippers (each unit may be a large number of zippers), and so the manager would also like to know how many of each type of zipper the firm must produce to minimize its average cost, and what its minimum average cost would be if it receives the order. (30 points)
C.How answers A and B differ? (10 points)
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