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Question
A manufacturing company produces x items at the total cost of Rs (180 + 4x). The demand function of this product is P = (240 − x). Find x for which profit is increasing.
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Solution
Total cost function (C) = 180 + 4x
Demand function (P) = 240 − x
Where x is the number of items produced.
Total revenue (R) = P × D
∴ R = x (240 − x)
∴ R = 240x − x2
Profit function π = R − C
∴ π = (240x − x2) − (180 + 4x)
∴ π = 240x − x2 − 180 − 4x
∴ π = − x2 + 236x − 180
Differentiating w.r.t.x,
∴ `"dπ"/"dx"` = − 2x + 236
Profit π is increasing if `"dπ"/"dx"` > 0
i.e. if − 2x + 236 > 0
i.e. if 236 > 2x
i.e. if x < `236/2`
i.e. if x < 118
∴ The profit is increasing for x < 118.
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If 0 < η < 1, then the demand is ______.
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State whether the following statement is True or False:
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The manufacturing company produces x items at the total cost of ₹ 180 + 4x. The demand function for this product is P = (240 − 𝑥). Find x for which profit is increasing
A manufacturing company produces x items at a total cost of ₹ 40 + 2x. Their price per item is given as p = 120 – x. Find the value of x for which elasticity of demand for price ₹ 80.
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p = 120 – x
∴ x = 120 – p
Differentiating w.r.t. p,
`("d"x)/("dp")` = `square`
∴ Elasticity of demand is given by η = `- "P"/x*("d"x)/("dp")`
∴ η = `square`
When p = 80, then elasticity of demand η = `square`
If elasticity of demand η = 0 then demand is ______.
If 0 < η < 1 then the demand is ______.
In a factory, for production of Q articles, standing charges are ₹500, labour charges are ₹700 and processing charges are 50Q. The price of an article is 1700 - 3Q. Complete the following activity to find the values of Q for which the profit is increasing.
Solution: Let C be the cost of production of Q articles.
Then C = standing charges + labour charges + processing charges
∴ C = `square`
Revenue R = P·Q = (1700 - 3Q)Q = 1700Q- 3Q2
Profit `pi = R - C = square`
Differentiating w.r.t. Q, we get
`(dpi)/(dQ) = square`
If profit is increasing , then `(dpi)/(dQ) >0`
∴ `Q < square`
Hence, profit is increasing for `Q < square`
