Suppose a firm faces the linear cost function C(x) = 35x+12000, where x is the n

Question

Suppose a firm faces the linear cost function C(x) = 35x+12000, where x is the number of units produced. State the y-intercept and describe the meaning of the y-intercept in economic terms.

1. The y-intercept is 12,000. This is the number of units the firm has produced.

2. The y-intercept is 35. This is the cost to produce 12000 units.

3. The y-intercept is 12,000. The firm has fixed costs of $12,000.

4. The y-intercept is 12,000. This is the firm's marginal cost when producing 35 units.

5. The y-intercept is 0. This is where the graph of the function crosses the vertical axis.

Explanation / Answer

C(x)=35x+12000

Here y intercept represents the initial cost which is 12000

Or you can say that the fixed cost is 12000

So the correct option is 3.

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