Market research for a certain ice cream company indicates that if the price per cup of ice cream is P50.00, the demand will be 1200 cups, whereas if the price is increased to P60.00, the demand will be 1100 cups. Therefore, at a production level of 200 cups of ice cream, the revenue generated by the company would be $130 for each additional cup of ice cream produced. Now, suppose it is known that the total cost of production of x cups of ice cream is given by C(x) = 3x + 25,500. (a) Find the value(s) of x at the break-even points. (b) Use marginal analysis to approximate the profit from the sale of the 500th cup of ice cream. Compare this value with the exact profit from the sale of the 500th cup.
Market research for a certain ice cream company indicates that if the price per cup of ice cream is P50.00, the demand will be 1200 cups, whereas if the price is increased to P60.00, the demand will be 1100 cups. Therefore, at a production level of 200 cups of ice cream, the revenue generated by the company would be $130 for each additional cup of ice cream produced. Now, suppose it is known that the total cost of production of x cups of ice cream is given by C(x) = 3x + 25,500. (a) Find the value(s) of x at the break-even points. (b) Use marginal analysis to approximate the profit from the sale of the 500th cup of ice cream. Compare this value with the exact profit from the sale of the 500th cup.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Therefore, at a production level of 200 cups of ice cream, the revenue generated by the company would be $130 for each additional cup of ice cream produced.
Now, suppose it is known that the total cost of production of x cups of ice cream is given by C(x) = 3x + 25,500.
(a) Find the value(s) of x at the break-even points.
(b) Use marginal analysis to approximate the profit from the sale of the 500th cup of ice cream. Compare this value with the exact profit from the sale of the 500th cup.
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