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 sell 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. Derive the total revenue function, R(x) for company. Derive the profit function, Π(x) for company. How many t-shirts must company B sell to in order to break-even? How many t-shirts must company B sell to maximize its profit?
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 sell 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. Derive the total revenue function, R(x) for company. Derive the profit function, Π(x) for company. How many t-shirts must company B sell to in order to break-even? How many t-shirts must company B sell to maximize its profit?
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter4: Extent (how Much) Decisions
Section: Chapter Questions
Problem 3MC
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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 sell 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.
- Derive the total revenue function, R(x) for company.
- Derive the profit function, Π(x) for company.
- How many t-shirts must company B sell to in order to break-even?
- How many t-shirts must company B sell to maximize its profit?
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