A MANUFACTUER HAS A MONTHLY FIXED COST OF A $100.00 AND APRODUCTION COST OF $14

Question

A MANUFACTUER HAS A MONTHLY FIXED COST OF A $100.00 AND APRODUCTION COST OF $14 PER EACH UNIT PRODUCED. THE PRODUCT SELLSFOR $20 A UNIT. A) WHAT IS THE COST FUNCTION? B) WHAT IS THE REVENUE FUCTION?    C) WHAT IS THE PRODUCT FUCTION? D) COMPUTE THE PROFIT (LOSS) CORRESPONDING TO PRDUCTION LEVELSOF 12,000 AND 70,000 A MANUFACTUER HAS A MONTHLY FIXED COST OF A $100.00 AND APRODUCTION COST OF $14 PER EACH UNIT PRODUCED. THE PRODUCT SELLSFOR $20 A UNIT. A) WHAT IS THE COST FUNCTION? B) WHAT IS THE REVENUE FUCTION?    C) WHAT IS THE PRODUCT FUCTION? D) COMPUTE THE PROFIT (LOSS) CORRESPONDING TO PRDUCTION LEVELSOF 12,000 AND 70,000

Explanation / Answer

unit=x, C(x)=100+14x    *fixed cost plus cost per unit* R(x)=20x   *revenue is $20 a unit, so x unit is totalrevenue* P(x)=R(x)-C(x)=20x-(100+14x)=6x-100    *revenue -cost is product function * P(12000)=71900 P(70000)=419900 plug in production level to see if the company makes a profit ornot.

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