Deck 28: Cost, Revenue and Profit Functions

Question 1

An Indian manufacturer establishes that its total cost per item function (in Indian Rupees, INR) is given by C = 6000x^-1 + 2.5+ 0.03x. Work out the volume that minimises average cost (cost per item).

A) 2,000
B) 20,000
C) 200,000
D) 2,000,000

Answer 1

200,000

Question 2

A Ghanaian company establishes that for one of its products = 350 and that = 600 - 2.5x. Which of the following options represents the correct function?

A) = 250 + 2.5x
B) = 950 - 2.5x
C) = 250 - 2.5x
D) You cannot work this out from the data given

Answer 2

= 250 - 2.5x

Question 3

Which of the following statements regarding maximum profit is TRUE?

A) The maximum profit level is when
B) The maximum profit level is when
C) The maximum profit level is when
D) None of these are correct

Answer 3

The maximum profit level is when

Question 4

Establish the profit if a retailer can purchase 150 jackets at 270 Emirati Dirham (AED) and sell them for AED 360.

A) AED 10,500
B) AED 11,500
C) AED 12,500
D) AED 13,500

Question 5

An Egyptian manufacturer has calculated a total cost function of C = 15 + 6x and a total revenue function of R = 3x + 2x². Calculate the level of sales that maximises profit (x represents volume in '000s of units).

A) 750
B) 800
C) 850
D) 900

Question 6

A company establishes that for one of its products = 400 and that = 850 - 3x. Calculate the volume (x) at which profit is maximised.

A) 150
B) 160
C) 170
D) 180

Question 7

If the price function for a given product is p_r(x) = 10 - 3x which of the following options represents the correct total revenue function?

A) R = 10x + 3x²
B) R = 10x - 3x²
C) R = 10x - 3x
D) R = 10x + 3x

Question 8

Which of the following options is NOT a component of the total cost function?

A) Special costs
B) Fixed costs
C) Travel costs
D) Variable costs

Question 9

What is the breakeven point if P = 48x - 3x² (x is hundreds of products)

A) 200
B) 300
C) 400
D) 500

Question 10

If demand for a product is 3,500 when the price is 7 Turkish Lira (TRY) and falls to 1,000 when the price is TRY 18 which of the following options is the correct linear demand function?

A) p_r(x) = 22.4 - 0.0044x
B) p_r(x) = 22.4 + 0.0044x
C) p_r(x) = -22.4 - 0.0044x
D) p_r(x) = -22.4 + 0.0044x