Question #9b8ac

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Question #9b8ac

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Answer 1 · 2016-06-10T13:08:50

This is similar to production in a factory.
There is a fixed cost even if there is no production. Also the cost of production comes down as the quantity of production increases.

Explanation:

my computer
The given graph is a straight line which can be represented by the following equation
$y = m x + c$ $y=mx+c$ , where $m and c$ $m and c$ are the slope of the line and $y$ $y$ - intercept respectively.

$P r i c e p = m \times Q u a n t i t y q + 10$ $Price" "p=mxxQuantity" "q+10$

This equation implies that price is directly related to the quantity. Notice that even for quantity $q = 0$ $q=0$ , price $p \neq 0$ $p!=0$ but has a value $= 10$ $=10$

If we see closely as shown by the red lines, we observe that as the quantity increases total price falls. Indicating that slope $m < 1 .$ $m<1.$

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Question #9b8ac

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