Users' questions

How do you find the cost revenue and profit functions?

How do you find the cost revenue and profit functions?

To obtain the cost function, add fixed cost and variable cost together. 3) The profit a business makes is equal to the revenue it takes in minus what it spends as costs. To obtain the profit function, subtract costs from revenue.

How do you find revenue from revenue function?

Total revenue equals price, P, times quantity, Q, or TR = P×Q. Multiply the inverse demand function by Q to derive the total revenue function: TR = (120 – . 5Q) × Q = 120Q – 0.5Q². The marginal revenue function is the first derivative of the total revenue function or MR = 120 – Q.

How do you find profit from cost and demand function?

The cost function is simply the intial cost plus the manufacturing cost. The demand function was given to us. The revenue function is simply x multiplied by the demand function. We know that to maximize profit, marginal revenue must equal marginal cost.

What is the formula for the revenue function?

revenue function (the product of the price per unit times the number of units sold; R = P × Q) will be R = $1.5 Q, where R is the revenue and Q is the number of units sold.

How do you find the profit function example?

Profit function = Revenue function – Cost function = R( ) – C( ) = (500 ) – (175 +150 ) = 500 – 175 – 150 = 325 -150 4. A company produces and sells a product and fixed costs of the company are Rs. 6,000 and variable cost is Rs. 25 per unit, and sells the product at Rs.

How do you find total cost function?

Total costs = fixed costs + (number of units of A * variable cost per unit of A) + (number of units of B * variable cost per unit of B)

How do you find total revenue from total cost?

Total Revenue = Number of Units Sold X Cost Per Unit You can use the total revenue equation to calculate revenue for both products and services.

What is revenue function?

A formula or equation representing the way in which particular items of income behave when plotted on a graph. For example, the most common revenue function is that for total revenue in the equation y = bx, where y is the total revenue, b is the selling price per unit of sales, and x is the number of units sold.

What is cost and cost function?

2 / 22. Page 3. Short-run Cost functions. The cost function measures the minimum cost of producing a given level of output for some fixed factor prices. The cost function describes the economic possibilities of a firm.

How do you find the cost function?

The cost function equation is expressed as C(x)= FC + V(x), where C equals total production cost, FC is total fixed costs, V is variable cost and x is the number of units. Understanding a firm’s cost function is helpful in the budgeting process because it helps management understand the cost behavior of a product.

How do you calculate revenue example?

Total Revenue = Number of Units Sold X Cost Per Unit For example, if you own a coffee shop and sell coffee and muffins, calculate the total revenue for muffins and the total for coffee and add them together. Total revenue is easy to see when using accounting software.