Construct the profit equation as a function of output using the demand equation.
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Mickey Mouse has a trap company with fixed costs of $89,000 and operating costs of $50 per trap and a market demand curve of: price=950-.10(output). Since Mick can't set his price find the revenue equation for his mousetrap business.
a) Construct the profit equation as a function of output using the demand equation. What does this relationship mean in the business sense.
b) Graph the function and find the breakeven points and other critical values. List the profits for every output level starting at 0 and continuing until output is 9,500.
c) Calculate the price that can be charged for every output level in your table. Where is profit a maximum? What is Mr. Mouse's bottom line?
A. Is it Profit = R-C
Costs = 89,000 + 50x
Price= 950- .1x
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Solution Summary
This tutorial calculates the price that can be charged for every output level in the table. It also shows where the profit is a maximum as well as what Mr. Mouse's bottom line is.
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