Question
(a) A manufacturer of jet engines estimates that the rate at which maintenance costs are incurred on its engines is a function of the number
(a) A manufacturer of jet engines estimates that the rate at which maintenance costs are incurred on its
engines is a function of the number of hours of operation of the engine. For one engine used on
commercial aircraft, the function is
7(x) = 60+0.040x
where x equals the number of hours of
operation and
operation.
r(x)
equals the rate at which repairs cost are incurred in dollars per hour
of
. Determine the rate at which costs are being incurred after 100
hours of operation. [2 Marks] ii. What are the total costs expected to equal during the first 100
hours of operation. [3 Marks] (b) The cost accountant of a firm
producing colour television has worked out the total cost function for the firm as TC = 1200-02 +0.020. A sales manager has provided the sales forecasting function
as P=114-0.250
where P is price and the quantity sold. Required: - i. Find the level of production that will yield minimum
average cost per unit and determine whether this level of output maximizes profit for the firm.
Marks]
[10
ii.
Determine the price that will maximize profit for the
firm.
[2 Marks]
Determine the maximum revenue for this firm.
[3
Marks]
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