Long Test 4 October 17, 2012

Chapter 4 Prof. C. Garcia, MST

Answer each of these problems completely and systematically. Use a RULER.

1. A cottage industry that produces leather bags sells 400 units when the price is P120.
The manager has determined that with a P30 reduction in the unit price, 400 more bags
will be sold.
a. Find the demand equation in slope-intercept form.
b. At what price will 200 bags be sold? Sketch the demand curve.

2. When the price is P80, 1000 plastic containers are available in the market. For each P5
increase, 3000 pieces more will be supplied.
a. Write the supply function in slope-intercept form.
b. Find the lowest price at which the supplier is willing to sell its product. Sketch the
supply curve.

3. At a unit price of P3,000, CSB Jewelry will supply 500 college rings. The supply is
diminished by 100 rings if the unit price is decreased by 10%.
a. What is the lowest price at which the item would be supplied?
b. How many rings will be supplied if the unit price is P4,600?

4. A manufacturer of placemats sells his product at P8.75 per piece selling all that he
produces. His fixed cost is P3,500 and his production cost is P3.75 apiece.
a. At what level of production will he have a profit of P3,500? A loss of P1,750?
b. At what level of output will he break even?
c. Draw the Break even chart.

5. A manufacturer of office furniture can sell swivel chairs for P750 per unit. The total
costs consist of fixed overhead of P22,050 plus production cost of P120 per chair.
a. Set up the Revenue, Cost, and Profit functions.
b. Determine the break even quantity.
c. Calculate the profit/loss if 150 swivel chairs are sold.
d. Draw the break even chart.

6. Determine the equilibrium price and quantity from the given equations. GRAPH the
equations in one set of axes. Also, label/indicate the demand and supply functions.

Formulas:
Long Test 4 October 17, 2012
Chapter 4 Prof. C. Garcia, MST

Answer each of these problems completely and systematically. Use a RULER.

1. A cottage industry that produces leather bags sells 500 units when the price is P150. The
manager has determined that with a P40 reduction in the unit price, 400 more bags will
be sold.
a. Find the demand equation in slope-intercept form.
b. At what price will 200 bags be sold? Sketch the demand curve.

2. When the price is P85, 1100 plastic containers are available in the market. For each P10
increase, 3000 pieces more will be supplied.
a. Write the supply function in slope-intercept form.
b. Find the lowest price at which the supplier is willing to sell its product. Sketch the
supply curve.

3. At a unit price of P3,500, CSB Jewelry will supply 700 college rings. The supply is
diminished by 150 rings if the unit price is decreased by 10%.
a. What is the lowest price at which the item would be supplied?
b. How many rings will be supplied if the unit price is P4,600?

4. A manufacturer of placemats sells his product at P8.75 per piece selling all that he
produces. His fixed cost is P4,500 and his production cost is P3.75 apiece.
a. At what level of production will he have a loss of P5,500? A profit of P7,750?
b. At what level of output will he break even?
c. Draw the Break even chart.

5. A manufacturer of office furniture can sell swivel chairs for P850 per unit. The total costs
consist of fixed overhead of P20,050 plus production cost of P140 per chair.
e. Set up the Revenue, Cost, and Profit functions.
f. Determine the break even quantity.
g. Calculate the profit/loss if 275swivel chairs are sold.
h. Draw the break even chart.

6. Determine the equilibrium price and quantity from the given equations. GRAPH the
equations in one set of axes. Also, label/indicate the demand and supply functions.

and

Formulas: