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2.2.1 Determine the total cost function TC(Q).
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2.2.1 Determine the total cost function .
The total cost consists of a fixed cost and a variable cost.
Fixed cost (FC) = R30.
Variable cost per unit = R3.
For units, the total variable cost (VC) is .
The total cost function is the sum of fixed cost and total variable cost.
The total cost function is .
2.2.2 Explain the value of in the profit function.
The profit function is given as .
Profit is defined as Total Revenue minus Total Cost: .
When the quantity produced , there is no revenue, so .
However, the fixed cost of R30 is still incurred, so .
Therefore, the profit at is .
From the profit function, .
Thus, .
The value of represents the fixed cost incurred as a loss when no units are produced ().
2.2.3 Given that and , determine and .
From 2.2.2, we know . So the profit function is .
Using the given information:
- For : Dividing by 2, we get:
- For :
From Equation 1, express in terms of :
Substitute this into Equation 2:
Now substitute the value of back into the expression for :
The values are .
2.2.4 Determine the break-even point(s).
Break-even points occur when profit .
Using the profit function with , , and :
Set :
Multiply the entire equation by 8 to eliminate fractions:
Multiply by -1 to make the leading coefficient positive:
Use the quadratic formula :
Here, , , .
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