A commodity has a demand function modeled by p=126−0.5x and a to

Sheelmgal1p

Sheelmgal1p

Answered question

2021-11-22

A commodity has a demand function modeled by p=1260.5x and a total cost function modeled by C=50x+39.75, where x is the number of units.
(a)Use the first marginal analysis criterion presented in class to find the production level that yields a maximum profit. Then use the second criterion to ensure that level yields a maximum and not a minimum. Finally, what unit price (in dollars) yields a maximum profit?
$ per unit
(b)When the profit is maximized, what is the average total cost (in dollars) per unit? (Round your answer to two decimal places.)
$ per unit

Answer & Explanation

Blanche McClain

Blanche McClain

Beginner2021-11-23Added 15 answers

Step 1
Demand function P=1260.5x(1)
Total cost function C=50x+39.75
a). Revenue R(x) =price x number sold
R(x)=Px
R(x)=(1260.5x)x
R(x)=126x0.5x2
Step 2
Profit P(x)=revenue-cost
=(126x0.5x2)(50x+39.75)
=126x0.5x250x39.75
=0.5x2+76x39.75
To maximize profit P'(x)=0
P(x)=0.5(2x)+76
P(x)=x+76=0
x=76
and P(x)=1<0 (maximum)
first and second derivative shows that at x=76, P(x) is maximum.

Huses1969

Huses1969

Beginner2021-11-24Added 18 answers

Step 1
b
Average cost C(x)=C(x)x=50x+39.75x
substitute the value of x=76, we get
C(x)=C(76)=50(76)+39.7576
C(x)=$50.52 per unit

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