Question

A company calculates the following for an item that they produce and sell. The revenue, R(x), from the sale of 90 items is 2300 dollars. The marginal revenue when 90 items are sold is 61 dollars per item. The cost, C(x), to produce 90 items is 1250 dollars. The marginal cost when 90 items are produced is 16 dollars per item. (a) Estimate the revenue from the sale of 89 items. (b) Estimate the cost from the sale of 94 items. (c) Estimate the profit from the sale of 91 items.

Answer 1

(a)

Estimated revenue from the sale of 89 items =R(90)+(R'(90))(89-90)
=>Estimated revenue from the sale of 89 items =2300+(61)(89-90)
=>Estimated revenue from the sale of 89 items =2300+(61)(-1)
=>Estimated revenue from the sale of 89 items =2300-61
=>Estimated revenue from the sale of 89 items =2239 dollars

(b)

Estimated cost from the sale of 94 items =C(90)+(C'(90))(94-90)
=>Estimated cost from the sale of 94 items =1250+(16)(94-90)
=>Estimated cost from the sale of 94 items =1250+(16)(4)
=>Estimated cost from the sale of 94 items =1250+64
=>Estimated cost from the sale of 94 items =1314 dollars

(c)

Estimated profit from the sale of 91 items =[R(90)+(R'(90))(91-90)]-[C(90)+(C'(90))(91-90)]
=>Estimated profit from the sale of 91 items =[2300+(61)(91-90)]-[1250+(16)(91-90)]
=>Estimated profit from the sale of 91 items =[2300+(61)(1)]-[1250+(16)(1)]
=>Estimated profit from the sale of 91 items =[2300+61]-[1250+16]
=>Estimated profit from the sale of 91 items =2361-1266
=>Estimated profit from the sale of 91 items =1095 dollars