Solve part d onlySolution of ist 3 parts is provided Only d Partd only a)The break-even points refers to the pointsat which the company's revenue equalsits costs. We can find the break-evenpoints by setting the revenue functionequal to the cost function and solving forX.The revenue function is given by:3R(x)=1250x-(=)x²5The cost function is given by:2C(x) = 28,000+ (²)x² +222xNow putting these two function equal toeach other21250x-()x² = 28,000+ (²)x² +222x1250x = 28,000+x²+222xx²-1028x+28,000 = 0by solving we get,X = 28Thus breakeven point = 28 unitsStep 3: Find the maximum revenueb) The maximum revenue refers to themaximum amount of money that the firmcan make by selling its product. We canfind the maximum revenue by setting thederivative of the revenue function equalto zero and solving for x.The derivative of the revenue function isgiven by:R'(x) = 1250 (6/5)xSetting this equal to zero and solving forx, we get:x= 1041.67 ≈ 1042Putting the value of x in revenue finctionwe get,R(x) = $651,041.60Therefore, the maximum revenue is$651,041.60, which occurs when thecompany sells 1042 units.Step 4: Form the required functionThe profit function can be find out by thedifference between the revenue functionand the cost function. It is given by:P(x) = R(x) - C(x)Subbing the revenue and cost functions,we get:32P(x)= 1250x – (²)x² – [28,000 + (²)x²-)x² +1028x-28,000P(x)=To find the maximum profit, we caninvolve similar technique as weaccomplished for tracking down themaximum revenue. Setting the derivativeof the profit function equivalent to zeroand solving for x, we get:2(²)x + 1028 = 0P'(x):= -Solving for x, we get:x = 2570Putting the value of x in profit functionwe get,Max profit = $1,292,980Therefore, the maximum profit is$1,292,80, which occurs when thecompany sells 2570 units.Solutiona) Thus breakeven point = 28 unitb) the maximum revenue is $651,041.60,which occurs when the company sells1042 units.c) the maximum profit is $1,292,80, whichoccurs when the company sells 2570units. +222Suppose a company has fixed costs of $28,000 and variable cost per unit ofdollars, where x is the total number of units produced. Suppose further that the sellingprice of its product is 1250 dollars per unit.-a) Find the break-even points.b) Find the maximum revenue.c) Form the profit function from the cost and revenue function and find maximum profit.d) What price will maximize the profit?

Suppose a company has fixed costs of $28,000 and variable cost per unit of dollars, where x is the…

Answered: d) What price will maximize the profit?

Business

Economics

d) What price will maximize the profit?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 5E

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