Solve the problem.A company has fixed costs of $3400 and a marginal cost of $3.86 per unit. Find the average cost function (i.e. the average cost per unit to produce x units). What is the horizontal asymptote of the graph of the average cost function? What information is provided by the horizontal asymptote?

Question

What will be an ideal response?

Answer 1

(x) = 
The horizontal asymptote is y = 3.86. As the number of units increases, the average cost per unit approaches, but never reaches, $3.86.