Answer :
The average cost function is C(x) = 5000x + 20,000/x, where x is the number of machines used in the production. The critical value is C(x) = 20,000 and it happens when x = 2.
If we have a function f(x), the critical point happens when its first derivative is equal to zero.
f '(x) = 0
In the given problem, the function is:
C(x) = 5000x + 20,000/x
Take the derivative:
C '(x) = 5000 - 20,000/x² = 0
5000 x² = 20,000
x² = 4
x = ±2
Since x is within the interval: 0<x<∞, the solution is x = 2
Substitute x = 2 into the function:
C(2) = 5000 (2) + 20000/2
C(2) = 10000 + 10000 = 20,000
Hence, the critical value is C(x) = 20,000 and it happens when x = 2.
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