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Revenue Problems.pdf

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Richard Blute

Revenue Problems 2011 When the price of a brand of golf ball is 10 dollars per golf ball, 32,000 golf balls are sold. When the price is raised to 13 dollars, 26, 000 golf balls are sold. A golf balls costs 4 dollars to make, and the owners of the golf ball company had an initial cost of 22,000. Find the demand function for this brand of golf ball. You may assume the demand is linear. How to find revenue function: Cost= Cx = Initial cost + cost(number of units) Revenue= Rx = (Price unit)(x) Profit= Px = Rx-Cx How to get demand function Although you might be tempted to write (10, 32000) as a point, it is indeed the other way around. 1. Write (32,000, 10) and (26, 000, 13) 2. Find the slope of these two points. This will be the first part of getting the demand equation p=D(x) 3. Slope will be -1/2000 4. Put the slope in the y-y1=m(x-x1) 5. The resulting equation will be the demand function Find the revenue and cost functions for this brand of golf ball. 1. Find the cost function by remembering that Cx= Cinital+Cost to produce a unit 2. Now write the revenue function remembering that revenue= D(x)(x), where D(x) is the demand function, and x are the number of units again 2 3. As a function you get R(x)= -1/2000x +26x Find the profit function for this brand of golf ball 1. For the profit function, just subtract the revenue function by the cost function 2009 A business sells 5,000 radios/ month at a price $300 dollars each. It is estimate that monthly sales will increase by a level of 50 units for each 2 dollars decrease in price. Find the demand function, as well as the revenue function. How to find the demand function here: 1. First remember that the demand function is denoted
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