Question

where q is the quantity of bicycles produced. When calculating the marginal revenue and marginal profit in this problem, use the approach given for the marginal cost and marginal revenue in the discussions in your textbook. a) If the fixed cost in producing the bicycles is $2800, find the total cost to produce 30 bicycles. Answer: $ 4718.9869 equation editorEquation Editor b) If the bikes are sold for $200 each, what is the profit (or loss) on the first 30 bikes

Answer 1

Question Completion

A manufacturer of mountain bikes has the following marginal cost function:

C(q)=600/(0.7q+5)

Answer:

a. The total cost = $3,492.40

b. The profit on the first 30 bikes is:

= $2,507.60

Explanation:

a) Data and Calculations:

Fixed cost for producing the bicycles = $2,800

Number of bicycles produced = 30

Selling price per bike = $200

Marginal cost (C(q)) =600/(0.7q+5)

= 600/ (0.7*30 + 5)

= 600/ (21 + 5)

= 600/26

= $23.08

Total cost = Fixed cost + (C(q))

= $2,800 + $23.08 * 30

= $2,800 + $692.40

= $3,492.40

Profit:

Sales revenue $6,000 ($200 * 30)

Less Total cost  3,492.40

Profit =             $2,507.60