112

CHAPTER 1

Linear Equations and Functions

The new equilibrium point is q 5 38, p 5 $260.

Checking, we see that

CHECKPOINT

CHECKPOINT SOLUTIONS

260 5 2 1 38 2 1 184

260 5 25 1 38 2 1 450

5. (a) Does a typical linear demand function have positive slope or negative slope? Why?
(b) Does a typical linear supply function have positive slope or negative slope? Why?
6. (a) What do we call the point of intersection of a supply function and a demand
function?
(b) If supply is given by p 5 0.1q 1 20 and demand is given by p 5 130 2 0.1q, find
the market equilibrium point.
C 1 x 2 5 75x 1 12,500
Yes. C 1 0 2 5 12,500 5 Fixed costs. In fact, fixed costs are defined to be C(0).
R 1 x 2 5 175x
R 1 100 2 5 175 1 100 2 5 $17,500, which means that revenue is $17,500 when 100
units are sold.
(a) Profit 5 Revenue 2 Cost or P 1 x 2 5 R 1 x 2 2 C 1 x 2
(b) P 1 x 2 5 175x 2 1 75x 1 12,500 2
5 175x 2 75x 2 12,500 5 100x 2 12,500
Break-even occurs where revenue equals cost 3 R 1 x 2 5 C 1 x 2 4 , or where profit is zero
3 P 1 x 2 5 0 4.
(a) Negative slope, because demand falls as price increases.
(b) Positive slope, because supply increases as price increases.
(a) Market equilibrium
(b) Market equilibrium occurs when 0.1q 1 20 5 130 2 0.1q
0.2q 5 110 or q 5 550
and p 5 0.1 1 550 2 1 20 5 75.

1. (a)
(b)
2. (a)
(b)
3.
4.
5.
6.

| EXERCISES | 1.6

and

TOTAL COST, TOTAL REVENUE, AND PROFIT

1. Suppose a calculator manufacturer has the total cost
function C 1 x 2 5 34x 1 6800 and the total revenue
function R 1 x 2 5 68x.
(a) What is the equation of the profit function for the
calculator?
(b) What is the profit on 3000 units?
2. Suppose a stereo receiver manufacturer has the total
cost function C 1 x 2 5 210x 1 3300 and the total revenue function R 1 x 2 5 430x.
(a) What is the equation of the profit function for this
commodity?
(b) What is the profit on 500 items?
3. Suppose a ceiling fan manufacturer has the total cost
function C 1 x 2 5 43x 1 1850 and the total revenue
function R 1 x 2 5 80x.
(a) What is the equation of the profit function for this
commodity?
(b) What is the profit on 30 units? Interpret your result.
(c) How many fans must be sold to avoid losing money?
4. Suppose a computer manufacturer has the total cost
function C 1 x 2 5 85x 1 3300 and the total revenue
function R 1 x 2 5 385x.

(a) What is the equation of the profit function for this

commodity?
(b) What is the profit on 351 items?
(c) How many items must be sold to avoid losing
money?
5. A linear cost function is C 1 x 2 5 5x 1 250.
(a) What are the slope and the C-intercept?
(b) What is the marginal cost, and what does it mean?
(c) How are your answers to parts (a) and (b) related?
(d) What is the cost of producing one more item if 50
are currently being produced? What is it if 100 are
currently being produced?
6. A linear cost function is C 1 x 2 5 27.55x 1 5180.
(a) What are the slope and the C-intercept?
(b) What is the marginal cost, and what does it mean?
(c) How are your answers to parts (a) and (b) related?
(d) What is the cost of producing one more item if 50
are currently being produced? What is it if 100 are
currently being produced?
7. A linear revenue function is R 5 27x.
(a) What is the slope?
(b) What is the marginal revenue, and what does it
mean?

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SECTION 1.6

8.

9.

10.

11.

12.

13.

14.

(c) What is the revenue received from selling one more

item if 50 are currently being sold? If 100 are being
sold?
A linear revenue function is R 5 38.95x.
(a) What is the slope?
(b) What is the marginal revenue, and what does it
mean?
(c) What is the revenue received from selling one more
item if 50 are currently being sold? If 100 are being
sold?
Let C 1 x 2 5 5x 1 250 and R 1 x 2 5 27x.
(a) Write the profit function P(x).
(b) What is the slope of the profit function?
(c) What is the marginal profit?
(d) Interpret the marginal profit.
Given C 1 x 2 5 21.95x 1 1400 and R 1 x 2 5 20x, find
the profit function.
(a) What is the marginal profit, and what does it mean?
(b) What should a firm with these cost, revenue, and
profit functions do? (Hint: Graph the profit function and see where it goes.)
A company charting its profits notices that the relationship between the number of units sold, x, and the profit,
P, is linear. If 200 units sold results in $3100 profit and
250 units sold results in $6000 profit, write the profit
function for this company. Find the marginal profit.
Suppose that the total cost function for an MP3 player
is linear, that the marginal cost is $54, and that the total
cost for 50 players is $8700. Write the equation of this
cost function and then graph it.
Extreme Protection, Inc. manufactures helmets for skiing and snow boarding. The fixed costs for one model
of helmet are $6600 per month. Materials and labor for
each helmet of this model are $35, and the company
sells this helmet to dealers for $60 each.
(a) For this helmet, write the function for monthly
total costs.
(b) Write the function for total revenue.
(c) Write the function for profit.
(d) Find C(200), R(200), and P(200) and interpret each
answer.
(e) Find C(300), R(300), and P(300) and interpret each
answer.
(f) Find the marginal profit and write a sentence that
explains its meaning.
A manufacturer of DVD players has monthly fixed
costs of $9800 and variable costs of $65 per unit for one
particular model. The company sells this model to dealers for $100 each.
(a) For this model DVD player, write the function for
monthly total costs.
(b) Write the function for total revenue.
(c) Write the function for profit.
(d) Find C(250), R(250), and P(250) and interpret each
answer.

Applications of Functions in Business and Economics

113

(e) Find C(400), R(400), and P(400) and interpret each

answer.
(f) Find the marginal profit and write a sentence that
explains its meaning.
BREAK-EVEN ANALYSIS
15. The figure shows graphs of the total cost function and
the total revenue function for a commodity.
y
5000
4000
3000
2000
1000
0

200

400

600

(a) Label each function correctly.

(b) Determine the fixed costs.
(c) Locate the break-even point and determine the
number of units sold to break even.
(d) Estimate the marginal cost and marginal revenue.
16. A manufacturer of shower-surrounds has a revenue
function of
R 1 x 2 5 81.50x

and a cost function of

C 1 x 2 5 63x 1 1850

Find the number of units that must be sold to break

even.
17. A jewelry maker incurs costs for a necklace according to
C 1 x 2 5 35x 1 1650

If the revenue function for the necklaces is

R 1 x 2 5 85x

how many necklaces must be sold to break even?

18. A small business recaps and sells tires. If a set of four
tires has the revenue function
R 1 x 2 5 89x

and the cost function

C 1 x 2 5 1400 1 75x

find the number of sets of recaps that must be sold to

break even.
19. A manufacturer sells belts for $12 per unit. The fixed
costs are $1600 per month, and the variable cost per
unit is $8.
(a) Write the equations of the revenue and cost
functions.
(b) Find the break-even point.

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114

CHAPTER 1

Linear Equations and Functions

20. A manufacturer sells watches for $50 per unit. The

fixed cost related to this product are $10,000 per
month, and the variable cost per unit is $30.
(a) Write the equations of the revenue and cost
functions.
(b) How many watches must be sold to break even?
21. (a) Write the profit function for Problem 19.
(b) Set profit equal to zero and solve for x. Compare
this x-value with the break-even point from Problem 19(b).
22. (a) Write the profit function for Problem 20.
(b) Set profit equal to zero and solve for x. Compare
this x-value with the break-even point from Problem 20(b).
23. Electronic equipment manufacturer Dynamo Electric,
Inc. makes several types of surge protectors. Their
base model surge protector has monthly fixed costs of
$1045. This particular model wholesales for $10 each
and costs $4.50 per unit to manufacture.
(a) Write the function for Dynamos monthly total
costs.
(b) Write the function for Dynamos monthly total
revenue.
(c) Write the function for Dynamos monthly profit.
(d) Find the number of this type of surge protector
that Dynamo must produce and sell each month to
break even.
24. Financial Paper, Inc. is a printer of checks and forms
for financial institutions. For individual accounts, boxes
of 200 checks cost $0.80 per box to print and package and sell for $4.95 each. Financial Papers monthly
fixed costs for printing and packaging these checks for
individuals are $1245.
(a) Write the function for Financial Papers monthly
total costs.
(b) Write the function for Financial Papers monthly
total revenue.
(c) Write the function for Financial Papers monthly
profit.
(d) Find the number of orders for boxes of checks
for individual accounts that Financial Paper must
receive and fill each month to break even.
25. A company manufactures and sells bookcases. The selling price is $54.90 per bookcase. The total cost function
is linear, and costs amount to $50,000 for 2000 bookcases and $32,120 for 800 bookcases.
(a) Write the equation for revenue.
(b) Write the equation for total costs.
(c) Find the break-even quantity.
26. A company distributes college logo sweatshirts and
sells them for $50 each. The total cost function is linear,
and the total cost for 100 sweatshirts is $4360, whereas
the total cost for 250 sweatshirts is $7060.
(a) Write the equation for the revenue function.
(b) Write the equation for the total cost function.
(c) Find the break-even quantity.

In Problems 27 and 28, some of the graphs of total

revenue (R), total cost (C), variable cost (VC), fixed cost
(FC), and profit (P) are shown as functions of the number
of units, x.
(a) Correctly label the graphs shown.
(b) Carefully sketch and label the graphs of the other
functions. Explain your method.
28. $
27. $

SUPPLY, DEMAND, AND MARKET EQUILIBRIUM

29. As the price of a commodity increases, what happens to
demand?
30. As the price of a commodity increases, what happens to
supply?
Figure 1.39 is the graph of the demand function for a
product, and Figure 1.40 is the graph of the supply
function for the same product. Use these graphs to
answer the questions in Problems 31 and 32.
p

600
400

Demand
200
q

Figure 1.39

200

400

600

800

600
400

Supply

200

Figure 1.40

q
200

400

600

800

31. (a) How many units q are demanded when the price p
is $100?
(b) How many units q are supplied when the price p is
$100?
(c) Will there be a market surplus (more supplied) or
shortage (more demanded) when p 5 $100?

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SECTION 1.6

32. (a) How many units q are demanded when the price p
is $200?
(b) How many units q are supplied when the price p is
$200?
(c) Will there be a market surplus or shortage when
the price p is $200?
33. If the demand for a pair of shoes is given by
2p 1 5q 5 200 and the supply function for it is
p 2 2q 5 10, compare the quantity demanded and the
quantity supplied when the price is $60. Will there be a
surplus or shortfall at this price?
34. If the demand function and supply function
for Z-brand phones are p 1 2q 5 100 and
35p 2 20q 5 350, respectively, compare the quantity
demanded and the quantity supplied when p 5 14. Are
there surplus phones or not enough to meet demand?
35. Suppose a certain outlet chain selling appliances has
found that for one brand of stereo system, the monthly
demand is 240 when the price is $900. However, when
the price is $850, the monthly demand is 315. Assuming that the demand function for this system is linear,
write the equation for the demand function. Use p for
price and q for quantity.
36. Suppose a certain home improvements outlet knows
that the monthly demand for framing studs is 2500
when the price is $1.00 each but that the demand is
3500 when the price is $0.90 each. Assuming that the
demand function is linear, write its equation. Use p for
price and q for quantity.
37. Suppose the manufacturer of a board game will supply
10,000 games if the wholesale price is $1.50 each but
will supply only 5000 if the price is $1.00 each. Assuming that the supply function is linear, write its equation.
Use p for price and q for quantity.
38. Suppose a mining company will supply 100,000 tons of
ore per month if the price is $30 per ton but will supply
only 80,000 tons per month if the price is $25 per ton.
Assuming that the supply function is linear, write its
equation.
Complete Problems 3943 by using the accompanying
figure, which shows a supply function and a demand
function.
p
40
30
20
10
q
10 20 30 40 50 60

Applications of Functions in Business and Economics

115

39. (a) Label each function as demand or supply.

(b) Label the equilibrium point and determine the price
and quantity at which market equilibrium occurs.
40. (a) If the price is $30, what quantity is demanded?
(b) If the price is $30, what quantity is supplied?
(c) Is there a surplus or shortage when the price is $30?
How many units is this surplus or shortage?
41. (a) If the price is $20, what quantity is supplied?
(b) If the price is $20, what quantity is demanded?
(c) Is there a surplus or a shortage when the price is
$20? How many units is this surplus or shortage?
42. Will a price above the equilibrium price result in a
market surplus or shortage?
43. Will a price below the equilibrium price result in a
market surplus or shortage?
44. Find the market equilibrium point for the following
demand and supply functions.
Demand:p 5 22q 1 320
Supply: p 5 8q 1 2
45. Find the market equilibrium point for the following
demand and supply functions.
Demand:
2p 5 2q 1 56
Supply:3p 2 q 5 34
46. Find the equilibrium point for the following supply and
demand functions.
Demand:p 5 480 2 3q
Supply:p 5 17q 1 80
47. Find the equilibrium point for the following supply and
demand functions.
Demand:p 5 24q 1 220
Supply: p 5 15q 1 30
48. Retailers will buy 45 cordless phones from a wholesaler
if the price is $10 each but only 20 if the price is $60.
The wholesaler will supply 35 phones at $30 each and
70 at $50 each. Assuming the supply and demand functions are linear, find the market equilibrium point.
49. A group of retailers will buy 80 televisions from a
wholesaler if the price is $350 and 120 if the price is
$300. The wholesaler is willing to supply 60 if the price
is $280 and 140 if the price is $370. Assuming the
resulting supply and demand functions are linear, find
the equilibrium point for the market.
50. A shoe store owner will buy 10 pairs of a certain shoe if
the price is $75 per pair and 30 pairs if the price is $25.
The supplier of the shoes is willing to provide 35 pairs
if the price is $80 per pair but only 5 pairs if the price
is $20. Assuming the supply and demand functions for
the shoes are linear, find the market equilibrium point.

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116

CHAPTER 1

Linear Equations and Functions

Problems 5158 involve market equilibrium after

taxation. Use the figure to answer Problems 51 and 52.

55. Suppose that a certain product has the following

demand and supply functions.
Demand:p 5 20.05q 1 65
Supply: p 5 0.05q 1 10

y
140
120

Tax

Supply
(after tax)

Demand

100

Supply
(before tax)

80

If a $5 tax per item is levied on the supplier and this tax

is passed on to the consumer, find the market equilibrium point after the tax.
56. Suppose that a certain product has the following
demand and supply functions.
Demand:p 5 28q 1 2800
Supply: p 5 3q 1 35

q
20

40

60

80 100

51. (a) What is the amount of the tax?

(b) What are the original equilibrium price and
quantity?
(c) What are the new equilibrium price and quantity?
(d) Does the supplier suffer from the tax even though
it is passed on?
52. (a) If the tax is doubled, how many units will be sold?
(b) Can a government lose money by increasing taxes?
53. If a $38 tax is placed on each unit of the product of
Problem 47, what are the new equilibrium price and
quantity?
54. If a $56 tax is placed on each unit of the product of
Problem 46, what is the new equilibrium point?

If a $15 tax per item is levied on the supplier, who

passes it on to the consumer as a price increase, find
the market equilibrium point after the tax.
57. Suppose that in a certain market the demand function
for a product is given by 60p 1 q 5 2100 and the supply function is given by 120p 2 q 5 540. Then a tax of
$0.50 per item is levied on the supplier, who passes it
on to the consumer as a price increase. Find the equilibrium price and quantity after the tax is levied.
58. Suppose that in a certain market the demand function
for a product is given by 10p 1 q 5 2300 and the supply function is given by 45p 2 q 5 360. If the government levies a tax of $2 per item on the supplier, who
passes the tax on to the consumer as a price increase,
find the equilibrium price and quantity after the tax is
levied.

KEY TERMS
AND FORMULAS
Section

Key Terms

1.1

Equation, members; variable; solution

Identities; conditional equations
Properties of equality
Linear equation in one variable
Fractional equation
Linear equation in two variables
Aligning the data
Linear inequalities
Properties
Solutions

1.2

Relation
Function
Vertical-line test
Domain, range

Formulas

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.