Simplifying the Revenue Function

Oct 13, 2025 by wbrum.org 10 views

Introduction

In the world of economics and business, revenue is a crucial factor that determines the success of a product or service. In this article, we will explore the concept of maximizing revenue from candy bar sales using a mathematical model. We will analyze the given function p(x) = 124 - x/20 and determine the number of candy bars that must be sold to maximize revenue.

Understanding the Problem

The problem states that the price charged for a candy bar is p(x) cents, and x thousand candy bars will be sold in a certain city. The function p(x) = 124 - x/20 represents the price of a candy bar as a function of the number of candy bars sold. Our goal is to find the number of candy bars that must be sold to maximize revenue.

Revenue Function

To maximize revenue, we need to understand the concept of revenue. Revenue is the total amount of money earned from the sale of a product or service. In this case, the revenue is the product of the price of a candy bar and the number of candy bars sold. Mathematically, the revenue function can be represented as:

R(x) = p(x) * x

Substituting the given function p(x) = 124 - x/20 into the revenue function, we get:

R(x) = (124 - x/20) * x

Simplifying the Revenue Function

To simplify the revenue function, we can expand the product and combine like terms:

R(x) = 124x - x^2/20

Finding the Maximum Revenue

To find the maximum revenue, we need to find the critical points of the revenue function. Critical points occur when the derivative of the function is equal to zero or undefined. Let's find the derivative of the revenue function:

R'(x) = 124 - x/10

Setting the derivative equal to zero, we get:

124 - x/10 = 0

Solving for x, we get:

x = 1240

Interpreting the Results

The critical point x = 1240 represents the number of candy bars that must be sold to maximize revenue. This means that if 1240 thousand candy bars are sold, the revenue will be maximized.

Conclusion

In conclusion, we have analyzed the given function p(x) = 124 - x/20 and determined the number of candy bars that must be sold to maximize revenue. The critical point x = 1240 represents the optimal number of candy bars to sell to maximize revenue. This result can be applied to real-world scenarios where businesses need to determine the optimal price and quantity of a product to maximize revenue.

Mathematical Derivations

Derivative of the Revenue Function

To find the derivative of the revenue function, we can use the product rule of differentiation:

R'(x) = d/dx [(124 - x/20) * x]

Using the product rule, we get:

R'(x) = (124 - x/20) * d/dx [x] + x * d/dx [(124 - x/20)]

Simplifying the expression, we get:

R'(x) = (124 - x/20) * 1 + x * (-1/20)

Combining like terms, we get:

R'(x) = 124 - x/20 - x/20

Simplifying further, we get:

R'(x) = 124 - x/10

Critical Points

To find the critical points of the revenue function, we need to set the derivative equal to zero:

124 - x/10 = 0

Solving for x, we get:

x = 1240

Second Derivative Test

To confirm that the critical point x = 1240 is a maximum, we can use the second derivative test:

R''(x) = d/dx [124 - x/10]

Simplifying the expression, we get:

R''(x) = -1/10

Since the second derivative is negative, we can conclude that the critical point x = 1240 is a maximum.

Graphical Analysis

To visualize the revenue function, we can graph the function using a graphing tool. The graph will show that the revenue function has a maximum at x = 1240.

Real-World Applications

The result of this analysis can be applied to real-world scenarios where businesses need to determine the optimal price and quantity of a product to maximize revenue. For example, a candy bar manufacturer can use this result to determine the optimal price and quantity of candy bars to sell to maximize revenue.

Limitations of the Analysis

This analysis assumes that the price of a candy bar is a linear function of the number of candy bars sold. In reality, the price may be affected by other factors such as market conditions, competition, and consumer behavior. Therefore, this analysis should be used as a rough estimate and not as a definitive solution.

Future Research Directions

Future research directions may include:

Analyzing the effect of market conditions on the price of a candy bar
Investigating the impact of consumer behavior on the demand for candy bars
Developing a more sophisticated model that takes into account multiple factors that affect the price and demand for candy bars.
Maximizing Revenue from Candy Bar Sales: Q&A =====================================================

Introduction

In our previous article, we analyzed the given function p(x) = 124 - x/20 and determined the number of candy bars that must be sold to maximize revenue. In this article, we will answer some frequently asked questions related to maximizing revenue from candy bar sales.

Q&A

Q: What is the optimal price of a candy bar to maximize revenue?

A: The optimal price of a candy bar is not explicitly given in the problem. However, we can infer that the price is a linear function of the number of candy bars sold, as represented by the function p(x) = 124 - x/20.

Q: How do I determine the optimal quantity of candy bars to sell to maximize revenue?

A: To determine the optimal quantity of candy bars to sell, we need to find the critical point of the revenue function. In this case, the critical point is x = 1240, which represents the number of candy bars that must be sold to maximize revenue.

Q: What is the relationship between the price and quantity of candy bars sold?

A: The price of a candy bar is a linear function of the number of candy bars sold, as represented by the function p(x) = 124 - x/20. This means that as the number of candy bars sold increases, the price of each candy bar decreases.

Q: How do I calculate the revenue from selling candy bars?

A: To calculate the revenue from selling candy bars, we need to multiply the price of each candy bar by the number of candy bars sold. Mathematically, the revenue function can be represented as:

R(x) = p(x) * x

Substituting the given function p(x) = 124 - x/20 into the revenue function, we get:

R(x) = (124 - x/20) * x

Q: What is the maximum revenue that can be earned from selling candy bars?

A: The maximum revenue that can be earned from selling candy bars is achieved when the number of candy bars sold is equal to the critical point x = 1240. At this point, the revenue function reaches its maximum value.

Q: How do I graph the revenue function to visualize the relationship between revenue and quantity of candy bars sold?

A: To graph the revenue function, we can use a graphing tool such as a graphing calculator or a computer software package. The graph will show that the revenue function has a maximum at x = 1240.

Q: What are some real-world applications of maximizing revenue from candy bar sales?

A: Maximizing revenue from candy bar sales has many real-world applications, such as:

Determining the optimal price and quantity of candy bars to sell to maximize revenue
Analyzing the effect of market conditions on the price and demand for candy bars
Investigating the impact of consumer behavior on the demand for candy bars

Q: What are some limitations of the analysis?

A: Some limitations of the analysis include:

Assuming that the price of a candy bar is a linear function of the number of candy bars sold
Ignoring other factors that may affect the price and demand for candy bars, such as market conditions and consumer behavior

Q: What are some future research directions?

A: Some future research directions may include:

Analyzing the effect of market conditions on the price of a candy bar
Investigating the impact of consumer behavior on the demand for candy bars
Developing a more sophisticated model that takes into account multiple factors that affect the price and demand for candy bars.

Conclusion

In conclusion, maximizing revenue from candy bar sales is a complex problem that requires a deep understanding of the relationship between price and quantity of candy bars sold. By analyzing the given function p(x) = 124 - x/20 and determining the number of candy bars that must be sold to maximize revenue, we can gain insights into the optimal price and quantity of candy bars to sell to maximize revenue.