MTH 241 Business Models / Review Problems LAB G

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Use the following information to answer questions 1-8.

Marketing research has found that at a price of $179.95 per unit, sales would be 175,000 units each
week.
If that price were to be raised by $10 per unit then sales would decrease by 5,000 units each week.
Production costs for this item are $54 per unit with weekly overhead costs of $225,000.
Let x represent the number of units produced and sold each week.

1) Find the linear demand function for the situation described. ) ( Price x
Attach some meaning to the y-intercept of the line whose equation youve just generated.

2) Find the revenue function. ) ( Revenue x

3) Find the linear cost function for the situation described. ) ( Cost x
(Production costs per unit * sales +overhead)

4) Find the profit function. ) ( Profit x

5) Find the marginal revenue function. ) ( Revenue x
dx
d


6) Find the marginal cost function. ) ( Cost x
dx
d


7) Find the marginal profit function. ) ( Profit x
dx
d

8) Evaluate all 7 functions youve developed at production/sales levels of :
(Include units for each and interpret what each is telling us about this product in the market)
a) 100,000 units per week
b) 118,987.5 units per week
c) 150,000 units per week.
(You may evaluate just a few of these to make time for the other problems if you would prefer.)


9) Below are the graphs of the ) ( Price x , ) ( Revenue x , ) ( Cost x and ) ( Profit x functions from the other
side.
Identify each..well, first decide which one almost doesnt show up on the graph, and then identify the
other three.
x-axis is tens of thousands of units produced/sold per week; y-axis is tens of millions of dollars





10. Given the graph of the second derivative of ) (t p
|
|
.
|

\
|
=
2
2
dt
p d
y
determine the intervals on which ) (t p is concave up and the intervals on which it is concave down.



) ( ' ' t p y =


11. Given the graph of the first derivative of ) (x h |
.
|

\
|
=
dx
dh
y
determine the intervals on which ) (x h is concave up and the intervals on which it is concave down.

a.




b.





12. Given the function x
x x
x f 4
3
4
5
) (
3 5
+ = , use the first and second derivatives to determine the
functions:
i) relative extrema
ii) intervals of increase and decrease
iii) intervals of concavity (i.e. concave up or concave down on the interval)
iv) points of inflection







) ( ' x h y =
) ( ' x h y =



13. A farmer is going to fence in a split pasture ( a rectangle with a piece of fence separating it into two
halves ).
The farmer has 10,000 yards of fencing.
What are the dimensions that will result in the largest area being fenced?







14. When the iPinch is priced at $68.95, sales will be 20,000 units/week.
Market research has found that for each decrease in price of $1/unit, sales should increase by 400
units/week.
This product costs $14.00/unit to make and the plant has weekly overhead costs of $12,500.
Determine the price they should charge for the iPinch that will result in the greatest weekly profit.
Use linear demand and cost functions to develop your profit model.