Revenue Function And Demand Function

The demand function is x 3 2 4 2 p where x is the number of units demanded and p is the price per unit.

Revenue function and demand function. Revenue is product of demand and number of items. The higher the price the less the demand. Graphs of revenue cost and profit functions for ice cream bar business at price of 1 50. Solution or modeling the revenue function notice that the demand depends on the price of the product.

4 a company s break even points occur where the revenue function and the cost function have the same value. Specifically the steeper the demand curve is the more a producer must lower his price to increase the amount that consumers are willing and able to buy and vice versa. Demand supply cost revenue and profit functions. However if the price is 70 dollars the demand is 5000.

What is your observation. I the revenue function r in terms of p. The demand curve is important in understanding marginal revenue because it shows how much a producer has to lower his price to sell one more of an item. Essentially the average cost function is the variable cost per unit of 0 30 plus a portion of the fixed cost allocated across all units.

This also implies that the profit function equals zero at break even points. 3 the profit a business makes is equal to the revenue it takes in minus what it spends as costs. If the price of the commodity increases then the demand decreases and if the price of the commodity decreases then the demand increases. In a market the quantity of a commodity demanded by the consumer depends on its price.

I i the price and the number of units demanded for which the revenue is maximum. Find the revenue function.