Question

A firm manufactures a product that sells for $10 per unit. Variable cost per unit is $5 and fixed cost per period is $1500. Capacity per period is 800 units. Perform a​ break-even analysis showing a detailed​ break-even chart.

a. Find the revenue​ function, TR. ​(Type an expression using x as the variable. Do not include the​ $ symbol in your​ answer.)

Answer 1

The revenue function for a firm that sells a product for $10 per unit is TR = 10x, where 'x' is the number of units sold. This function represents the total sales income of the firm for 'x' units.

Step-by-step explanation:

To perform a break-even analysis for a firm manufacturing a product, we must first calculate the total revenue function (TR). The total revenue is given by the price of the product multiplied by the number of units sold. In this case, the firm sells its product at $10 per unit.

The revenue function, TR, can be represented as TR = 10x, where 'x' is the number of units sold. This function describes the total income the firm would receive from selling 'x' units of the product.

For the provided scenario at a quantity of 40 units, the total revenue is 640 dollars, as the firm sells these units at 16 dollars each, which lies above the average cost curve indicating economic profits. However, in our case, the selling price is $10.