Problem Sheet-7

Applications of Calculus
1. A company has examined its cost structure and revenue structure and has determined that C the total cost and R the total revenue and x the number of units product are related as: C = 100 + 0.020 x 2 and R = 4x. Find the production rate x that will maximize profits of the company. Find that profit. Find also the profit when x = 152 units. 2. If the marginal revenue function for output is given by MR = total revenue function and deduce the demand function. 3. The marginal cost of a firm given by MC = 1.075 0.004 x, where x is the number unit production. Find the total cost and the average cost function of the firm if the cost of producing 5 units is $81.5. 4. The cost C of manufacturing a certain article is given by the formula 48 + 3x 2 x where x is the number of articles manufactured. Find the minimum value of C. C = 5+ 2 35 x + . Find 3 2 6 + 5, find the ( x + 2) 2

5. The total cost C for output x is given by C = (i) Cost when output is 4 units.

(ii) Average cost when output is 10 units. (iii) Marginal cost when output is 3 units. 6. The marginal cost function of manufacturing x shoes is 6 + 10 x 6 x 2 . The total cost of producing a pair of shoes is $20. Find the total cost and the average cost function. 7. If the marginal propensity to consume is given by MPC = 1.50 + 0.20 x 2 , where x is the income. Find the total consumption function, given that C(10)= 4.80.

8. Suppose the total cost C(x) (in thousands of dollars) for manufacturing x sailboats per year is given by the function C(x) = 575 + 25x 0.25x2, 0 x 50, a) Find the marginal cost at a production level of x boats per year. b) Find the marginal cost at a production level of 40 boats per year and interpret the results. c) Use the total cost function to find the exact cost of producing the 41st boat and discuss the relationship between this result and the marginal cost found in part (b). 9. Suppose the total sales S (in thousands of CDs) for a compact disk are given by 90t 2 S (t ) = 2 t + 50 where t is the number of months since the release of the CD. a) Find S (t ). b) Find S(10) and S (10) . Write a grief verbal interpretation of these results. c) Use the results from part (b) to estimate the total sales after 11 months. 10. A company manufactures and sells x television sets per month. The monthly cost and price-demand equations are
C ( x) = 60,000 + 60 x x p = 200 ; 0 x 10,000 50

Find the following for each month: a) The maximum revenue. b) The government has decided to tax the company $5 for each set produced. Taking into account this additional cost, how many television sets should the company manufacture each month in order to maximize its monthly profit? What is the maximum monthly profit? How much should the company charge for the television sets to realize the maximum monthly profit? 11. (a) Find the intervals where the following function f (x) is concave upward and concave downward and also find the point of inflection:
f ( x) = 9 + 3 x 4 x 2 .

(b) Find the intervals where the following function f (x) is increasing and decreasing and also find the local extrema:
f ( x) = x + 4 . x

12. A company manufactures ten speed and three speed bicycles. The weekly demand and cost functions are
p = 230 9 x + y q = 130 + x 4 y C ( x, y ) = 200 + 80 x + 30 y

where $p is the price of a ten speed bicycles, $q is the price of a three speed bicycles, x is the weekly demand for ten speed bicycles, y is the weekly demand for three speed bicycles, and C ( x, y ) is the cost function. Find the R x (10, 15) and Py (10, 15) , and interpret the results. 13. A firm produces two types of calculators, x thousand of type A and y thousand of type B per year. If the revenue and cost equations for the year (in millions of dollars)
R ( x, y ) = 2 x + 3 y C ( x, y ) = x 2 2 xy + 2 y 2 + 6 x 9 y + 5

Determine how many of each type of calculator should be produced per year to maximize profit. What is the maximum profit? 14. A store sells two brands of color print film. The store pays $6 for each roll of brand A film and $8 for each roll of brand B film. A consulting firm has estimated the following daily demand equations for those two competitive products:
x = 116 30 p + 20q y = 144 + 16 p 24q Demand equation for brand A Demand equation for brand B

where p is the selling price for brand A and q is the selling price for brand B. How should the store price each brand of film to maximize daily profits? What is the maximum profit? 15. A manufacturer incurs the following costs in producing x blenders in one day for 0 < x < 200; fixed costs $450; unit production cost $30 per blender; equipment maintenance and repairs 0.08x2 dollars. (a) What is the average cost, AC(x), per blender if x blenders are produced in one day? (b) Find the critical values for AC(x), the intervals where the AC(x) is decreasing and increasing and also find the local extrema.