Math Problem Statement

The marketing research department for a company that manufactures and sells notebook computers established the following price-demand and revenue functions: p(x) = 2000 - 60x, R(x) = 2000x - 60x^2, where p(x) is the price per notebook computer, R(x) is the revenue in thousands of dollars, and x is the number of computers sold in thousands. The cost function is C(x) = 4000 + 500x. Find the break-even points, the values of x where profit occurs, and the maximum profit.

Solution

Here is the graph of the Revenue function R(x)R(x), Cost function C(x)C(x), and Profit function P(x)P(x):

  1. Revenue Function R(x)=2000x60x2R(x) = 2000x - 60x^2 (in blue) peaks and then declines as the number of computers increases.
  2. Cost Function C(x)=4000+500xC(x) = 4000 + 500x (in red) increases linearly.
  3. Profit Function P(x)=R(x)C(x)P(x) = R(x) - C(x) (in green) shows where the company makes a profit and where it incurs losses.

Key Observations:

  • The break-even points occur where the profit function intersects the x-axis (i.e., P(x)=0P(x) = 0).
  • The maximum profit occurs at the peak of the profit curve.
  • We need to find the exact values for these intersections and the maximum profit.

Next, let's calculate the break-even points and the maximum profit.### Key Results:

  1. Break-even points: The company breaks even at approximately x=3.04x = 3.04 (thousand computers) and x=21.96x = 21.96 (thousand computers). This means the company neither makes a profit nor a loss at these production levels.

  2. Maximum profit: The maximum profit occurs at x16.67x \approx 16.67 thousand computers. However, this value seems to result in a negative profit ($-45,666.67 in thousands), which implies that this model predicts a loss beyond this point.

Would you like further clarification on any part of the process, or should we continue solving the remaining tasks?

Here are five questions you could explore next:

  1. How do the break-even points change if the cost function varies?
  2. What happens to the maximum profit if you alter the price-demand function?
  3. How would the graph look if a fixed cost was added?
  4. Can you interpret the behavior of the profit curve for low or high production levels?
  5. What does the negative profit value at the peak imply about the company’s business model?

Tip: When working with quadratic functions, always check the domain restrictions to make sure your results are realistic within the context (e.g., production cannot be negative).

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Math Problem Analysis

Mathematical Concepts

Algebra
Revenue Functions
Cost Functions
Profit Functions

Formulas

Revenue function: R(x) = p(x) * x
Cost function: C(x) = 4000 + 500x
Profit function: P(x) = R(x) - C(x)
Break-even points: P(x) = 0

Theorems

Quadratic Formula
Derivative (to find maximum profit)

Suitable Grade Level

Grades 9-12