Cost Function Approximation and Tangent Line Illustration Assignment

Assignment Task

Questions 

1. What are the total costs of producing two units?

2. What is the marginal cost of two units of production?

3. How large is the error of the approximation, the difference between the approximate value and the actual costs?

4. How large is the error of the approximation the difference between the approximate value and the actual costs?

5. Find and sketch in one graph three functions: the marginal revenue function, the marginal cost function MC3, and the marginal profit function If there are intersections with the vertical axis and with the horizontal axis, please mark them clearly?

6. In the graph that you made highlight the part of the domain where the profit function is increasing and the part where is decreasing. Also, highlight the part of the domain where the profit function is convex and the part where is concave. What can you conclude about the point where the profit is maximized?

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