Question

Hank runs a successful hot dog stand right across from the arch at the University of Georgia in downtown Athens. Hank has to order his hot dogs, buns, mustard, relish, and all other condiments in bulk, as well as pay taxes, licensing fees, and other small business expenses. Therefore, Hank has a relatively large “sunk” cost associated with his business – it averages out to $950 per week just to keep the cart open. The cost of producing hot dogs is given by C(h) = 950 + .45(h). Where h is the number of hot dogs and C(h) is the cost. If he sold 100 hotdogs at $10.25 each, how much profit would he make for the week?

Answer 1

The profit he would make in one week is  $30.

What is Hank's profit?

Profit is the total revenue less total cost.

Total revenue = price of one hot dog x number of hotdogs sold

$10.25 x 100 = $1025

Total cost = 950 +( 0.45 x 100)

950 + 45 = 995

Profit = 1025 - 995 = $30

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