What is the total cost function formula?
The cost function equation is expressed as C(x)= FC + V(x), where C equals total production cost, FC is total fixed costs, V is variable cost and x is the number of units. This is vital to anticipate costs that will be incurred in the next operating period at the planned activity level.
How do you find revenue function with price and cost function?
1) Revenue is equal to the number of units sold times the price per unit. To obtain the revenue function, multiply the output level by the price function.
How do you calculate the break-even price?
Break-even price is calculated by using this formula = (Total fixed cost/Production unit volume) + Variable Cost per unit.
What is a total cost function?
For example, the most common cost function represents the total cost as the sum of the fixed costs and the variable costs in the equation y = a + bx, where y is the total cost, a is the total fixed cost, b is the variable cost per unit of production or sales, and x is the number of units produced or sold.
How do you calculate profit-maximizing output in monopolistic competition?
One characteristic of a monopolist is that it is a profit maximizer. Since there is no competition in a monopolistic market, a monopolist can control the price and the quantity demanded. The level of output that maximizes a monopoly’s profit is calculated by equating its marginal cost to its marginal revenue.
How do you find the total revenue function?
Total revenue equals price, P, times quantity, Q, or TR = P×Q. Multiply the inverse demand function by Q to derive the total revenue function: TR = (120 – . 5Q) × Q = 120Q – 0.5Q².
How do you calculate break-even point with example?
In order to calculate your company’s breakeven point, use the following formula:
- Fixed Costs ÷ (Price – Variable Costs) = Breakeven Point in Units.
- $60,000 ÷ ($2.00 – $0.80) = 50,000 units.
- $50,000 ÷ ($2.00-$0.80) = 41,666 units.
- $60,000 ÷ ($2.00-$0.60) = 42,857 units.