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Math Assignment

The document presents solutions to three optimization problems involving maximizing profit or minimizing total cost. The first problem shows that maximum profit for a radio manufacturer is achieved when 29 sets are produced per week at a monopoly price of $368 per set. The second problem finds that maximum profit for a firm occurs at an output of 50 units and a price of 2280 taka. The third problem determines that the economic order quantity that minimizes total inventory cost is 2000 units, resulting in a total cost of 10,250 taka.

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114 views

Math Assignment

The document presents solutions to three optimization problems involving maximizing profit or minimizing total cost. The first problem shows that maximum profit for a radio manufacturer is achieved when 29 sets are produced per week at a monopoly price of $368 per set. The second problem finds that maximum profit for a firm occurs at an output of 50 units and a price of 2280 taka. The third problem determines that the economic order quantity that minimizes total inventory cost is 2000 units, resulting in a total cost of 10,250 taka.

Uploaded by

RhýthmRifat
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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∴

Ex 18. A radio manufacturer produces x sets per week at a total cost of $(x 2 + 78x + 2500). He is a
monopolist and the demand function for his product is x = (600 – p)/8 when the price is $p per set.
Show that maximum net revenue (profit) is obtained when 29 sets are produced per week. What is
the monopoly price?

Answer:

Total cost (TC) = x 2+ 78 x +2500

600− p
Demand Function, x ¿
8

=›600−¿p=8x

=›p=600−¿8x

∴TR=p*x

= (600−¿8x)*x

= 600x−¿8 x 2

Profit Function,P=TR-TC

∴ P=600 x−8 x 2−(x 2 +78 x+ 2500)

=522 x −9 x2 −2500

dP
=522−18 x
dx

Let,

522−18 x =0

=›18x=522

∴x=29

d dP
dx dx ( )
=−18< 0 ,

So, Maxima Occurs.

∴If 29 sets are produced and sold every week, then profit will be maximum.

Price=600-8x
∴

=600-8*29

=600-232

=368

Ex.29The total cost function of a firm is C(x) = ⅓ x3 – 5x2 + 28x + 10 where C is total cost and x is
output. A tax at the rate of Tk.2 per unit of output is imposed and the producer adds it to his cost. If
the market demand function is given by p = 2530 – 5x, where Tk. p is the price per unit of output. Find
the profit maximizing output and price.

Answer:

TC = ⅓ x3 – 5x2 + 28x + 10

After adding tax , TC= ⅓ x3 – 5x2 + 28x + 10+2x

== ⅓ x 3 – 5x2 + 30x + 10

TR=p*x

= (2530−¿5x)*x

=2530x−¿5x2

Profit function, P=TR-TC

=2530x– 5x 2 – (⅓ x3 – 5x2 + 30x + 10)

=2530x– 5x 2 –⅓ x3 + 5x2 –30x – 10

dP
∴ =2500–x2
dx

Let, 2500–x2=0

∴ x=50

d dP
( )
dx dx
=–10x

At x=50,

d dP
( )
dx dx
=–500<0, maxima occurs.

So, Profit is maximum when x=50 units.


∴

∴ Price=2530−¿5*50

=2280 taka.

EX.53 The material demanded is 10,000 units per year; the cost price of material is Tk.1 per unit, the
cost of replenishing the stock of material per order regardless of the size Q of the order is Tk.25; and
the cost of storing the material is 12.5% per year on the taka value of average quantity on hand. Find
the total cost function, economic order quantity and the total cost corresponding to that.

Answer:

Total demand=10000 units

Cost =1 taka per unit

Ordering Cost=25

12.5% of average quantity on hand.

Every time order Q units.

10000
No of order= ,
Q

10000
Order cost= *25
Q

250000
=
Q

Purchasing Cost=10000*1=10000

Q
Average unit= ,
2

Q Q
For unit taka required= taka
2 2

Q Q 12.5 Q
∴ *12.5%= * =
2 2 100 16

TIC=HC+OC+PC

Q 250000
= + +10000
16 Q
∴

d (TIC) 1 −2
= + 250000Q (-1)
dQ 16

1 250000
= −
16 Q2

1 250000
Let, − =0
16 Q2

250000 1
¿, =
Q2 16

¿ , Q2 =250000 ×16

∴ Q ¿2000

d d(TIC )
∴ ¿0−250000 ×(−2)×Q−3
dQ dQ

500000
¿ >0 whenQ=2000
Q3

∴ Minima occur.

∴ EOQ¿2000 units

Q 250000
TIC ¿ + +10000
16 Q

2000 250000
¿ + +10000
16 2000

¿10250

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