Question

Your college newspaper, The Collegiate Investigator, has fixed production costs of $76 per edition and marginal printing and distribution costs of 42¢ per copy. The Collegiate Investigator sells for 62¢ per copy.

a) Write down the associated cost, revenue, and profit
functions.

Answer 1

Associated cost = 0.42x + 76

Revenue = $0.62x

Profit function = 0.20x - 76

Step-by-step explanation:

Data provided in the question:

Fixed production costs = $76 per edition

Marginal printing and distribution costs = 42¢ per copy = $0.42

Selling cost = 62¢ per copy. = $0.62

Now,

Associated cost = mx + b

here,

m is the marginal cost

x is the number of copies

b is the fixed cost

Thus,

Associated cost = 0.42x + 76

Revenue = Selling cost × Number of copies

= $0.62x

Profit function = Revenue - Associated cost

= $0.62x - ( 0.42x + 76 )

= $0.62x - 0.42x - 76

= 0.20x - 76