If company A manufactures t-shirts and sells them to retailers for US$9.80 each. It has fixed costs of $2625 related to the production of the t-shirts, and the production cost per unit is US$2.30. Company B also manufactures t-shirts and selll them directly to consumers. The demand for its product is p = 15 − x 125 , its production cost per unit is US$5.00 and its fixed cost are the same as for company A . (vii) Derive the total revenue function,R(x) for company B. (viii) Derive the profit function,Π(x) for company B.
If company A manufactures t-shirts and sells them to retailers for US$9.80 each. It has fixed costs of $2625 related to the production of the t-shirts, and the production cost per unit is US$2.30. Company B also manufactures t-shirts and selll them directly to consumers. The demand for its product is p = 15 − x 125 , its production cost per unit is US$5.00 and its fixed cost are the same as for company A . (vii) Derive the total revenue function,R(x) for company B. (viii) Derive the profit function,Π(x) for company B.
Chapter6: Proudction Costs
Section: Chapter Questions
Problem 8SQP
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Question
If company A manufactures t-shirts and sells them to retailers for US$9.80 each.
It has fixed costs of $2625 related to the production of the t-shirts, and the production cost per
unit is US$2.30. Company B also manufactures t-shirts and selll them directly to consumers.
The demand for its product is p = 15 −
x
125 , its production cost per unit is US$5.00
and its fixed cost are the same as for company A .
(vii) Derive the total revenue function,R(x) for company B.
(viii) Derive the profit function,Π(x) for company B.
(ix) How many t-shirts must company B sell to in order to break-even.
(x) How many t-shirts must company B sell to maximise its profit
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