Question

Suppose a firm has a monthly fixed costs of $13,000$ and variable costs of $250 per unit produced. Find the profit function if the firm sells it's product for $400 per unit (assume that units produced equal units sold).

Answer 1

Answer:

f(p) = 150r - 13,000 where r is the number of units produced and sold and f(p) is the profit function.

Explanation:

The profit function is one that is dependent on other factors like the fixed cost, number of units produced and sold, variable costs, sales etc. profit is sales less all costs (fixed and variable).

Given;

Fixed cost = $13,000

Variable cost per units = $250

Selling price per unit = $400

Let the number of units produced and sold be r and the profit function be f(p)

Then,

f(p) = 400r - (250r + 13,000)

f(p) = 400r -250r -13000

f(p) = 150r - 13,000