Question

Gail works in a flower​ shop, where she produces 10 floral arrangements per hour. She is paid ​$8 an hour for the first eight hours she works and ​$16 an hour for each additional hour she works. What is the​ firm's cost​ function?

Answer 1

Answer:

Y= 16x -64

Explanation:

The cost function would be derived as follows

let Y represent the total cost and X the total number of hours

Y = 8(8) + 16(x-8)

Y = 64 + 16x  - 128

Y = -64   + 16x

Y= 16x - 64

The firm's cost function:

Y= 16x -64

Answer 2

The cost function of the firm is $\text{F= 16x -64}$. The formula for the cost function is explained below:

This is necessary in order to forecast costs for the following operating term at the planned activity level.

$\text{C(x)= F + V(x), where;}\\\text{C = Production cost}\\\\\text{F = Total fixed costs}\\\text{V = Variable cost}\\\text{x = Number of units}$

The following is the cost function based on Gail's working hours.

Assume F is the total cost and X is the total number of hours:

$\text{F = 8(8) + 16(x-8)\\F = 64 + 16x - 128\\F = -64 + 16x\\F= 16x - 64}\\\text{The firm's cost function:}\\\text{F= 16x -64}$

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