SOLUTION: the total monthly cost C(q) of a retail operation is linearly related to the quanitity q, by the following equation: C(q) = 0.52 q + 30,000. They can sell each unit for 0.80cents
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Question 106474: the total monthly cost C(q) of a retail operation is linearly related to the quanitity q, by the following equation: C(q) = 0.52 q + 30,000. They can sell each unit for 0.80cents
a) what are the two parameters of the cost equation
b) what is the profit equation P(q)?
c) How many units must be sold to make a profit of $250,000?
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
C(q) = 0.52 q + 30,000. They can sell each unit for 0.80cents
a) what are the two parameters of the cost equation
Startup cost is $30,000
Cost of producing each unit is 52 cents or $0.52
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b) what is the profit equation P(q)?
Income function: I(q)=0.80q
Profit function: P(q)=I(q)-C(q)
P(q)= 0.80q-(0.52q+30000)
P(q)= 0.28q - 30,000
c) How many units must be sold to make a profit of $250,000?
250,000 = 0.28q - 30,000
0.28q = 280,000
q = 1,000,000
----------------
More than one million units must be sold to make a profit.
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Cheers,
Stan H.
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