Let c(x) be the cost of producing a product of x units. Given that c(x) follows the experience cost curve, c(x)= k(1 – b) xb-1 where k and b are constants and 0 < b < 1. Show that c(x) is a decreasing function, in this case. production costs show a downward trend with an increase in the number of products produced! Is this function a convex function? Explain!

Let c(x) be the cost of producing a product of x units. Given that c(x) follows the experience cost curve, c(x)= k(1 – b) xb-1 where k and b are constants and 0 < b < 1. Show that c(x) is a decreasing function, in this case. production costs show a downward trend with an increase in the number of products produced! Is this function a convex function? Explain!

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.14P

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