Quantitative analysis

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If we produce 350 units of output, the total cost is $11,500. It costs us $12,900 to produce 420 units. If we assume the relationship is linear, determine the cost function.

  • Quantitative analysis -

    treat your data as two ordered pairs
    ( 350 , 11500) and (420 , 12900)

    find the equation like you would given any two ordered pairs,
    i.e.
    find the slope etc

  • Quantitative analysis -

    cost = slope (number of units) + constant
    y = m x + b
    11500 = 350 m + b
    12900 = 420 m + b
    solve for m and b by elimination or substitution

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