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The variable cost $(V)$ of manufacturing a product varies according to the equation $V=4q$, where $q$ is the quantity produced. The fixed cost $(F)$ of production of same product reduces with $q$ according to the equation $F=\dfrac{100}{q}$. How many units should be produced to minimize the total cost $(V+F)$?

  1. $5$
  2. $4$
  3. $7$
  4. $6$
asked in Numerical Ability by Veteran (101k points)
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Total Cost, $T = 4q +\dfrac{100}{q}$

When total cost becomes minimum, first derivative of $T$ becomes $0$ and second derivative at the minimum point will be positive.

Differentiating $T$ with respect to $q$ and equating to $0,$

$4 - \dfrac{100}{q^{2}} = 0\Rightarrow q = +5$  or $-5.$ Since, we can't have negative number of product, $q = 5.$

Taking second derivative, at $q = 5$ gives $\dfrac{200}{125} =\dfrac{8}{5} > 0,$ and hence $5$ is the minimum point.
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