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29 November, 01:13

Suppose a firm that produces pints of gourmet ice cream has monthly fixed costs of $12,000. The variable costs come to $1.50 per pint produced. (for up to 40,000 pints/month) and the firm sells each pint of ice cream for $3. Find the firm's profit function.

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  1. 29 November, 01:27
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    P (x) = 1.5x-12,000

    Explanation:

    The profit function equation is:

    P (x) = R (x) - C (x)

    P (X) = Profit

    R (x) = Revenue = 3x

    C (x) = cost = fixed costs+variable costs=12,000+1.50x

    x = number of pints of ice cream

    Then, you can replace the equation with the information given:

    P (x) = 3x - (12,000+1.50x)

    P (x) = 3x-12,000-1.5x

    P (x) = 1.5x-12,000

    According to this, the answer is that the firm's profit function is P (x) = 1.5x-12,000.
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