A family business provides bread to a local restaurant on a daily basis. The fam

Question

A family business provides bread to a local restaurant on a daily basis. The family incurs $300 in fixed costs per day. Each loaf costs them. including their hourly labor ingredients,an additional $1.50 to make. They sell the bread for $1.70 a loaf to the restaurant.
Q1: What is the linear cost function? Q2: What is the revenue function? Q3: What is the profit function? Q4: What is the quantity at the break-even point? A family business provides bread to a local restaurant on a daily basis. The family incurs $300 in fixed costs per day. Each loaf costs them. including their hourly labor ingredients,an additional $1.50 to make. They sell the bread for $1.70 a loaf to the restaurant.
Q1: What is the linear cost function? Q2: What is the revenue function? Q3: What is the profit function? Q4: What is the quantity at the break-even point? A family business provides bread to a local restaurant on a daily basis. The family incurs $300 in fixed costs per day. Each loaf costs them. including their hourly labor ingredients,an additional $1.50 to make. They sell the bread for $1.70 a loaf to the restaurant.
Q1: What is the linear cost function? Q2: What is the revenue function? Q3: What is the profit function? Q4: What is the quantity at the break-even point?

Explanation / Answer

Cost Function = Fixed Cost + Variable cost per unit * quantity

Cost Function = 300 + 1.5*Q

Revenue Function = 1.7*Q

Profit = Revenue - Cost

Profit = 1.7Q - (300+1.5Q) = 0.2Q - 300

Break Even Point is where profit is zero or in other words the profit per unit is enough to cover fixed cost.

0.2Q - 300 = 0

Q = 1500

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