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Application (Max Min)

The document discusses maximizing revenue, minimizing costs, and maximizing profit for businesses. It provides examples of total revenue, cost, and profit functions and shows how to calculate the optimal output level to maximize revenue or profit and minimize costs. The key steps are taking the derivative of the function and setting it equal to zero to find the critical point where the value is maximized or minimized.

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Ankita Mukherjee
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31 views

Application (Max Min)

The document discusses maximizing revenue, minimizing costs, and maximizing profit for businesses. It provides examples of total revenue, cost, and profit functions and shows how to calculate the optimal output level to maximize revenue or profit and minimize costs. The key steps are taking the derivative of the function and setting it equal to zero to find the critical point where the value is maximized or minimized.

Uploaded by

Ankita Mukherjee
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Maximisation of Revenue

•If  p=f(x) is the price per unit and x is the number


of units sold, then the revenue (R) is given by
To maximize the total revenue, we let and solve
for x. Now R is maximum at the value of x,
where Since , the necessary condition to
maximise the total revenue is that
•Q.  The total revenue function of a firm is given
by , where x is the number of units sold. Find the
number of units to be sold so as to maximise the
revenue also find the maximum revenue.
Solution:
Thus 20 units to be sold to get the maximum
revenue of 24000.
•Q  the demand curve for a particular commodity
is , find the level of output at which the total
revenue is maximum. What is the maximum
revenue?

Solution:
Thus the maximum revenue is 16 at the output
of 8 units.
Q. A company handles an apartment building
with 200 units. Experience has shown that if the
rent for each of the units is ₹150 per month, all
the unit will be filled, but one unit will become
vacant for each ₹1 increase in the monthly rate.
What rent should be charged to maximise the
total revenue from the building? Also determine
the maximum revenue.
•  x denote the increase in rent.
Let
The increased new rent=₹(150+x)
Also the decreased in the number of occupied units=(200-x)
Revenue,

R is to be maximised.

For R to be maximised, let

Since at R attains maximum at x=25


At x=25 R=30625
And new rent is 150+x=175
₹175 is to be charged to get maximum revenue of ₹30,625
•  
Minimisation of Cost, Average cost and Marginal cost

Q. the total cost function of a product is given by

Where x in the number of units produced. Determine the number


of units that should be produced to minimize the total cost.
•Q.  If the cost function of a firm is given by

Where C stands for cost and x for output,


calculate the output at which the average cost is
minimum. Show that at this point, marginal cost
is equal to average cost.
•Q.  The total cost function of a manufacturing
firm is given by

Find the output at which the marginal cost is


minimum.
•   Maximisation of profit
Q. A firm’s profit function is given by

Where x is the number of units. Find the output at


which the profit is maximum. Also find the total profit
and the profit per unit.
•   A firm has the revenue function
Q.

And the cost function


Find the maximum profit.

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