For a certain company, the cost function for producing x items is C(x)=50x+100 and the revenue function for selling x items is R(x)=−0.5(x−100)2+5,000 . The maximum capacity of the company is 120 items.

The profit function P(x) is the revenue function R(x) (how much it takes in) minus the cost function C(x) (how much it spends). In economic models, one typically assumes that a company wants to maximize its profit, or at least make a profit!

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Assuming that the company sells all that it produces, what is the profit function?
P(x)=

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ABIOLATAIWO2015GO ABIOLATAIWO2015GO · Answer 1

Assuming that the company sells all that it produces, The profit function is: P(x)=-x^/2+50x -100 or P(x)=-0.5x²+50x -100.

Profit = R-C = -(x-100)^2/2 +5000 - 50x -100 =

-(x^2 -200x +10000)/2 -50x +4900 =

-x^2/2 +100x -5000 +5000 -50x +4900

Collect like terms

-x^/2+50x -100

Hence,

Profit function = P(x)=-0.5x²+50x -100

Maximum profit generating output can be determine by taking the derivative and setting it equal to zero

R-C = -x^2/2 + 50x -100

R'-C' = -x + 50 =0

P(0)x = 50

Maximum profit can be determine by substituting x=50 into the original profit equation, R-C

P(50) =-(1/2)(50)^2 +50(50) -100

P(50)= -1250 + 2500 -100

P(50) = $1150 profit

P(120) =-(1/2)(120)^2 +50(120) -100

P(120)= -3600 + 6000 -100

P(120) = $2300 profit

Therefore the profit function is: P(x)=-x^/2+50x -100 or P(x)=-0.5x²+50x -100.

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