Question

You are setting up a part-time business with an initial investment of $21,000. The unit cost of the product is $11.20, and the selling price is $18.70. (a) Find equations for the total cost C (in dollars) and total revenue R (in dollars) for x units.

Answer 1

Equations for the total cost C

Total cost is the sum of total fixed cost and total variable cost incurred on the production of units sold. If c represents total cost and x represents units sold, then

C = $11.20x + $21,000

(where $11.20 is variable cost per unit)

Equations for the total revenue R

Total revenue is the product of number of units sold and sale price per unit. If R represents total revenue and x represents units sold, then

R = $18.70x