Question

A company’s profit, P, in dollars, for producingx machines in one day is given by P = 500x - 20x*2.If the company produces 10 machines in one day, then,according to this formula, what is the profit for thatday?(A) $5,000(B) $4,000(C) $3,000(D) $2,000(E) $1,000

Answer 1

The profit of that day is (C) P = $3,000.

What is profit?

• A profit is a difference between the revenue generated by an economic entity's outputs and the opportunity costs of its inputs.
• Total revenue minus total cost, including both explicit and implicit costs, equals total revenue.
• Unlike accounting profit, it only refers to the explicit costs that appear on a company's financial statements.
• Accounting profit is calculated by subtracting the firm's total revenue from only the firm's explicit costs.
• When analyzing a firm, an economist considers all opportunity costs, both explicit and implicit.

To find the profit of that day:

Given:

• P = 500x − 20x², where 'x' is the number of machines per day produced.
• If the company produces 10 machines in one day, that is x = 10.

By substituting x = 10 in the above equation, we get:

• P = 500 × 10 - 20 × 10²
• P = 5000 - 2000
• P = 3,000/

Therefore, the profit of that day is (C) P = $3,000.

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