Question 2.10a: Suppose that each chicken snack box is sold for £3.50 irresp......

Essential Mathematics for Economics and Business [1390651]

Suppose that each chicken snack box is sold for £3.50 irrespective of the number of units sold.
(a) Write down the equation of the total revenue function.
(b) Graph the total revenue function.

Step-by-Step

The 'Blue Check Mark' means that this solution was answered by an expert.
Learn more on how do we answer questions.

(a) Total revenue is price multiplied by the number of units sold, that is,

TR = 3.5Q

Note that price is constant at £3.50 irrespective of the value of Q.

(b) Total revenue is represented graphically by a straight line, with slope = 3.5 and intercept = 0. It is graphed by calculating values of TR for any values of Q, for example, Q = 0, 2, 4, 6. These points are outlined in Table 2.6 and then plotted in Figure 2.25.

Table 2.6 Total revenue
Q	TR = PQ = 3.5Q	Point (Q, TR)
0	TR = 3.5(0) = 0	(0, 0)
2	TR = 3.5(2) = 7	(2, 7)
4	TR = 3.5(4) = 14	(4, 14)
6	TR = 3.5(6) = 21	(6, 21)

2.25a

Related Answered Questions

Question: 2.24

Pocket money, £15, may be spent on either pool (60p per hour) or skating (£1.20 per hour). (a) Write down the equation of the budget constraint. Graph the constraint. (b) Show by calculation and graphically how the budget constraint changes when: (i) The price of pool increases to 75p, the other ...

Verified Answer:

(a) Let x = number of hours of pool,

P_X[/l...

Question: 2.12

(a) Deduce the equation of a line whose slope is of 1.7 and which passes through the point (2, 5). (b) Plot the graph of the line. ...

Verified Answer:

(a) Using equation (2.9), the equation of the line...

Question: 2.6

LINEAR DEMAND FUNCTION The demand function is given by the equation P = 100 − 0.5Q. (a) State and give a verbal description of the slope and intercepts. (b) What is the quantity demanded when P = 5? (c) Plot the demand function P = 100 − 0.5Q for 0 < Q < 200. (d) Find an expression for the demand ...

Verified Answer:

(a) The slope and vertical intercept may be deduce...

Question: 2.5

PLOT THE LINE ax + by + d = 0 The equation of a line is given as 4x + 2y − 8 = 0. (a) Write the equation of the line in the form y = mx + c, hence write down the slope and y-intercept. Give a verbal description of slope and intercept. (b) Which variable should be plotted on the vertical axis and ...

Verified Answer:

(a) Rearrange the equation of the line with y as t...

Question: 2.19

Given the demand function for computers as P = 2400 − 0.5Q. (a) Determine the coefficient of point elasticity of demand when (i) P = 1800, (ii) P = 1200, and (iii) P = 600. Give a verbal description of each result. (b) If the price of computers increases by 12%, calculate the percentage change in ...

Verified Answer:

(a) (i) At P = 1800 the quantity of computers dema...

Question: 2.13

(a) A line passes through the points (2, 4) and (6, 1). Deduce the equation of the line. (b) Plot the graph of the line. ...

Verified Answer:

(a) Step 1: The slope of the line is calculated by...

Question: 2.11

Calculate the slope of a line given the following two points on the line, (x1, y1) and (x2, y2) (2, 1) and (−4,−2) ...

Verified Answer:

The slope, m, is calculated using equation (2.8): ...

Question: 2.10b

The company that sells chicken snack boxes for £3.50 each has fixed costs of £800 per day and variable costs of £1.50 for each chicken snack box. (a) Write down the equation for (i) total revenue, (ii) total costs, (iii) profit. (b) Calculate the number of chicken snack boxes that must be produced ...

Verified Answer:

(a) (i) TR = 3.5Q, (ii) TC = 800 + 1.5Q, (iii) π =...

Question: 2.9

A pumpkin grower has fixed production costs of £10 for the rent of a stall at a farmers’ market and variable production costs of £2 per pumpkin (a) Write down the equation for the total cost function. (b) Graph the total cost function ...

Verified Answer:

(a) FC = £10; while VC = £2 × Q, since to produce ...

Question: 2.8

The supply function is given by P = 10 + 0.5Q. (a) State and verbally describe the slope and intercepts. (b) Plot the supply function, P = 10 + 0.5Q, for 0 ≤ Q ≤ 100. ...

Verified Answer:

(a) The vertical intercept is c = 10. This means t...