For the Marginal Analysis Paper, my business will be producing maple baseball bats. After some research, I found that these kind of baseball bats can be produced for about $60 per unit. Fixed monthly cost for my company are $2375, which includes rent and utilities. With that information, a cost function of C(x)=60x+2375, where x is the quantity of units, can be used to determine the monthly cost of running the business. The Price-Demand equation for my hypothetical company is x=f(x)=8500-25p. Using this equation, I can find the feasible range of products that I can sell in one months’ time. Obviously, 0 is the lower bound of the function because I cannot sell less than 0 products. The upper bound is 8500 which means the feasible range for the
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The cost to produce 200 units is C (200) =60(200) +2375=$14,375. The revenue from producing 200 units can be represented by R (200) = 340(200)-〖200〗^2/25 = $66,400. Finally, the profit for producing 200 units can be represented as R (200) -C (200) = $52,025. The marginal cost per unit is C^1(200) = 60. The 60 means that at a production level of 200 units, the cost is increasing at the rate of $60 per unit. The marginal revenue per unit is B^1(200) =340-(2(200))/25 = 324. This 324 means that at a production level of 200 units, revenue is increasing at a rate of $324 per unit. The marginal profit can be found by subtracting the marginal cost (C^1) from the marginal revenue (R^1) which results in the marginal profit being P^1 (200)= $264. The $264 means that the profit per unit is changing at a rate of $264 per unit. The average cost of at the production level of 200 units is $71.86. This means that the cost per unit, which includes fixed costs, is $71.86. The average Revenue per unit is $332 which means that the company is bringing in $332 per unit sold. We can subtract the average cost ($71.86) from the average revenue ($332) to get the average profit of $260.14 per unit which means that the company is making an average of $260.14 per …show more content…
Revenue at this level is R (4250) = 340(4250)-4250/25 = $722,500 and costs at this level would be C (4250) = $257,375. All this can be seen on the graph below where the X axis is units produced and the Y axis is revenue. Marginal analysis is an important part of business. All businesses have one goal and it is to make money. Using marginal analysis can help business owners and manager maximize profits and revenues while decreasing costs. Knowing your products elasticity helps you know what can happen if you were to rise and lower prices of products in your company. These are all essential to know when you are trying to run an efficient, smart, and profitable business. This is one of the things I have learned in math class that I can see myself using in the future and I will use this with my future
The cost to produce 200 units is C (200) =60(200) +2375=$14,375. The revenue from producing 200 units can be represented by R (200) = 340(200)-〖200〗^2/25 = $66,400. Finally, the profit for producing 200 units can be represented as R (200) -C (200) = $52,025. The marginal cost per unit is C^1(200) = 60. The 60 means that at a production level of 200 units, the cost is increasing at the rate of $60 per unit. The marginal revenue per unit is B^1(200) =340-(2(200))/25 = 324. This 324 means that at a production level of 200 units, revenue is increasing at a rate of $324 per unit. The marginal profit can be found by subtracting the marginal cost (C^1) from the marginal revenue (R^1) which results in the marginal profit being P^1 (200)= $264. The $264 means that the profit per unit is changing at a rate of $264 per unit. The average cost of at the production level of 200 units is $71.86. This means that the cost per unit, which includes fixed costs, is $71.86. The average Revenue per unit is $332 which means that the company is bringing in $332 per unit sold. We can subtract the average cost ($71.86) from the average revenue ($332) to get the average profit of $260.14 per unit which means that the company is making an average of $260.14 per …show more content…
Revenue at this level is R (4250) = 340(4250)-4250/25 = $722,500 and costs at this level would be C (4250) = $257,375. All this can be seen on the graph below where the X axis is units produced and the Y axis is revenue. Marginal analysis is an important part of business. All businesses have one goal and it is to make money. Using marginal analysis can help business owners and manager maximize profits and revenues while decreasing costs. Knowing your products elasticity helps you know what can happen if you were to rise and lower prices of products in your company. These are all essential to know when you are trying to run an efficient, smart, and profitable business. This is one of the things I have learned in math class that I can see myself using in the future and I will use this with my future