Homework 2.5 – Business terms and Marginal Analysis.

Plus Intro to Critical Points

1. A puzzle expert wrote a new Sudoku book. His initial costs are $864. Binding and
packaging each book costs $0.80. The price of each book is $2. How many must he sell
to break even?

2. Suppose that a company manufactures and produces notebook computers. It costs

=
C ( x) 4, 000 + 500 x thousand dollars to manufacture x thousand computers.

The price-demand equation for x thousand computers=

is p 2, 000 − 60 x .

a. What is the cost of producing 13,000 notebook computers?

b. What is the revenue made from selling 12,000 computers?

c. What is the profit function?

 d. What is the profit from producing and selling 15,000 computers?

e. How many computers do they need to sell to break-even? What is the price they
should charge to break-even?

f. Based on your answer to letter e, explain why the company would not want to
manufacture 24,000 computers.

3. The total profit (in dollars) from the sale of x DVDs is P( x) =

5 x − 0.005 x 2 − 450 .

a) What is the marginal profit function?

b) Determine the marginal profit at a production level of 200 DVDs.

 c) At the production level of 200 DVDs, should the company increase or decrease
production to increase profit? Explain your answer.

d) At the production level of 350 DVDs, should the company increase or decrease
production to increase profit? Explain your answer.

4. Suppose a company manufactures automatic transmissions for cars. The total weekly cost
(in dollars) of producing x units is given by C ( x)= 50, 000 + 600 x − 0.75 x 2

a) At the weekly production level of 200 tanks, should the company increase or decrease
production to decrease cost? Explain.

b) At a weekly production level of 600 tanks, should the company increase or decrease
production to decrease cost? Explain.
5. The total weekly cost (in dollars) incurred by Lincoln Records in pressing x compact
discs is C ( x) = 2000 + 2 x − 0.0001x 2 .
a. What is the actual cost incurred in producing the 1001st disc?

b. What is the marginal cost when x=1000?

c. Find the average cost function C (x).

d. Find the marginal average cost function.

6. Custom Office makes a line of executive desks. It is estimated that the total cost for
making x units of their Senior Executive model is C ( x) = 100 x + 200,000 dollars/year.
a. Find the average cost function C (x).

b. Find the marginal average cost function.

 c. What happens to C (x). when x is very large? What does that mean in the context of
the problem?

7. The gross annual earnings of a certain company are f=

(t ) 10t 2 + t + 229 thousand

dollars t years after its formation is January 2010.

a. At what rate will the gross annual earnings of the company be growing in January

2015?

b. At what percentage rate will the gross annual earnings be growing in January

2015?