The following graph shows the per-unit production cost (in dollars) of

Question

The following graph shows the per-unit production cost (in dollars) of a microchip at various quantities produced. The solid line is the trend line of unit costs as production quantity increases. The dotted line connects the points representing minimum and maximum production levels.

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As the number of chips produced increases, the cost per chip .

The greatest change in the cost per chip caused by increasing production quantity occurs when the number of chips produced is .

Question #2 based on the same graph is available here

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Official Answer

Dropdown 1: Decreases at a slowing rate Dropdown 2: Less than 50,000

ishahere · Answer

What is meant by decreasing at a slowing rate?

Sajjad1994 · Answer

It mean decreasing but at a slower rate. here is the example

100, 50, 25, 0

100, 70, 50, 35, 25, 20, 16, 13, 11, 9, 8, 7, 6, 5, 4, 3, 2, 1, 0

In both examples, the values are decreasing, but in the second example, the decrease in the value is slowing down.

Sajjad1994 · Answer

Official Explanation

The greatest change in the cost per chip caused by increasing production quantity occurs when the number of chips produced is ___________.

Explanation

Each increase in the number of chips produced causes a decrease in cost per chip, but the first increase will have the most dramatic effect. The greatest change in the cost per chip occurs when the vertical change is largest—that is, when the line connecting adjacent points is the steepest. This occurs for early increases in production, when the number of chips produced is less than 50,000.

Answer: less than 50,000

riri3026 · Answer

Sajjad1994

Can you please explain how the decreasing at a slowing rate will show up, I chose decreases at a constant rate.

Also, can you help me understand what are the black squres indicating (imo, they are showing the trend line only) but i tend to get confused.

Oppenheimer1945 · Answer

1) if you join the dots, the slope is in a reducing trend, hence its decreasing at slowing rate.

same we get in case of current decay in an inductor , f(x)=1+exp(-x)

2) no of chips around 24x1000 shows max drop in production cost per chip , hence <50,000

CEO2021 · Answer

Hi  Sajjad1994   chetan2u 
when can we infer "decreasing at a accelerating rate" or with a "slowing rate"??

Please make understand with example and relate the same with your posted question.

thanks for help

chetan2u · Answer

The wprdings may not be the best, but what the question intends to ask is as below..

The 15 black rhombus/diamond give us the number of chips being producs and the cost per chip in each of these 15 productions.

Join these 15 points..
Now the slope of initial increase in number( the ones in the left of the graph) have a steep fall, but it gradually flattens.

Accelerated decrease: The first few rhombus, showing the number of cips from 5 to 80, shows a decrease in cost per chip from 140 to 50.
Decrease at a slower rate: As the number of chips are increased further, the advantage in terms of reduced cost goes down, as from number increased from 80 to 200 reduces the cost per chip from 50 to 30. Although the cost is still getting reduced but not so rapidly as it was when the number of chips were leser in number.

Thsi basically tells us that the advantage of increasing production can bring down the cost only till a certain level, and further decrease does not benefit that well.

For example: A person can make 10 toys in a day. The salary of the person is 100$ and raw material for each toy is 5$.
So if production is 1 toy, it will cost 100+5 or 104, but when it increases to 2, it becomes 100+2*5 or 110 for two toys or $55 per toy. So, it will reduce till 10 toys are made 100+10*5 or 150 @ 15$ per toy.
But the moment you have to make the 11 th toy, you will have to add another person and therby add 100$ to the cost.

nikchopra · Answer

What is the difference between decreasing at a contant rate or decreasing at a slower rate?

Gmat860sanskar · Answer

Hey Nik,

A  decrease at a constant rate  means the value drops by the same amount in each time interval. For example, if a company’s revenue is 20,000 in 2003–04, 15,000 in 2004–05, and 10,000 in 2005–06, it is decreasing by 5,000 each year. Since the decline is equal across all intervals, this represents a constant rate of decrease.
 
 A  decrease at a slower rate  means the value is still going down, but the amount of decrease becomes smaller over time. For instance, if revenue falls from 20,000 to 15,000, then to 12,500, and then to 11,000, the decreases are 5,000, then 2,500, then 1,500. This shows that the rate of decrease is gradually slowing down with each interval.
 
 I hope this makes the concept clear.

The following graph shows the per-unit production cost (in dollars) of

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The following graph shows the per-unit production cost (in dollars) of

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