Module 1 Worksheet
1) A company has identified its production cost as being linearly related to output. They also
recognized that they had a fixed cost of $1000, and total cost of $5000 for an output of 20.
(a) The research department utilized the information given above and calculated a cost function,
C(x) = 200x + 1000. Show how the research department calculated the cost function from the
data given above.
The company’s price demand function p( x ) , provided by the research department has a domain
1 ≤ x ≤ 600 and is given as 800 – 2x
(b) Determine the company’s revenue function R ( x ) .
(c) Determine the company’s profit function P ( x ) .
(d) Find the output that will produce the maximum profit.
(e) What is the wholesale price at this output?
(f) Using algebra, find the break-even points to the nearest whole number.
(g) For what outputs will a profit occur?
(h) For what outputs will a loss occur?
2) A warehouse rents containers. They have determined that there is a linear relationship
between the unit price of a container and the quantity demanded, and a linear relationship
between the unit cost of a container and the supply. The annual report shows the following
data:
Price demand function is given by p(x) = -4x + 320
Variable cost is $184
When no services are provided, the company has a cost of $480.
a) Determine the company’s Revenue function .
b) Determine how many storage containers must be rented for the company to maximize
revenue.
c) Determine the company’s Cost functionC ( x ) .
d) Determine the company’s break even points.
e) How many storage containers can the company rent to ensure that a profit is made?
3) The price demand function for a juice company is given by p(x) = 300 – 3x.
The domain of the function is 0 ≤ x ≤ 200.
(a) Find the revenue function, R(x)
(b) If the fixed cost is $420 and the cost to produce each item is $40.
Determine the company’s cost function Cx.
(c) Determine the company’s profit function Px.
(d) Using algebra, find the break-even points.
(e) ) State the outputs when profit will occur?
(f) State the outputs when loss will occur?
4) At a price of $24.00 per dozen eggs, the supply is 300,000 cartons and the demand is
600,000. At a price of $27.00 per dozen, the supply is 500,000 cartons, and the demand is
480,000.
a. Find a price-supply equation, if the amount supplied is in thousands of cartons.
b. Find a price-demand equation, if the amount demanded is in thousands of cartons
c. Find the equilibrium price and equilibrium quantity.
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5) A group of analysts derived the demand equation for a certain product as p=400−x .
Based on continuous research the analysts have recognized that there is a linear
relationship between the unit price of the product and the quantity supplied. The analysts
have not derived the supply equation but have collected the data as shown in the table
below.
YEAR PRICE SUPPLY
2017 200 5
2018 380 14
2019 600 25
2020 500 20
(a) Determine the company’s price-supply equation.
(b) Determine the equilibrium market output.