Question
The revenue generated by the sale of 5000 units of a commodity is $\$ 400$ thousand dollars, and the average cost of producing 5000 units is $\$ 20$ per unit.a. What is the profit on 5000 units of the commodity?b. Assuming $R(q)$ represents revenue and $\bar{C}(q)$ represents the average cost for the production and sale of $q$ units of a commodity, write an expression for profit.
Step 1
The total cost $T(q)$ is given by the average cost $\bar{C}(q)$ times the number of units $q$. So, we have: \[T(q) = \bar{C}(q) \times q = 20 \times 5000 = 100,000\] This means the total cost of producing 5000 units is \$100,000. Show more…
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