Question

A publishing house finds that the cost directly attributed to each book is ₹30 and that the fixed costs are ₹15000. If each book can be sold for ₹45 then determine (1) Cost function.
(2) Revenue function

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Answer 1

Given : A publishing house finds that the cost directly attributed to each book is ₹30 and that the fixed costs are ₹15000.

each book can be sold for ₹45

To Find  : (1) Cost function.

(2) Revenue function

Solution:

Let say book published  = x

Cost = Fixed cost + Variable Cost

C(x)  = 15000 + 30x

Cost function

Revenue  = Selling Price * Number of books sold

R(x)  = 45x

Revenue Function

Profit Function = R(x) - C(x)

= 45x - ( 15000  + 30x)

= 15x  - 15000

Break even  15x  - 15000 = 0

=> x = 1000

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