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For the following exercises, solve for the desired quantity. A fast-food restaurant has a cost of production \(C(x)=11 x+120\) and a revenue function \(R(x)=5 x\) . When does the company start to turn a profit?

Short Answer

Expert verified
The company cannot turn a profit with the given cost and revenue functions.

Step by step solution

01

Understand the Problem

We need to determine the number of units, \(x\), for which the revenue, \(R(x)\), is greater than the cost, \(C(x)\). This is when the company starts to turn a profit.
02

Set Up the Inequality

The company turns a profit when the revenue equals the cost. Thus, the inequality to solve is \(R(x) > C(x)\). Substitute the given functions: \(5x > 11x + 120\).
03

Rearrange the Inequality

Subtract \(11x\) from both sides of the inequality to isolate terms involving \(x\): \(5x - 11x > 120\).
04

Simplify the Inequality

Simplify the expression: \(-6x > 120\). This inequality shows the result after combining like terms.
05

Solve for x

Divide both sides by \(-6\). Remember, dividing by a negative number reverses the inequality sign: \(x < -20\).
06

Interpret the Result

Since the result \(x < -20\) doesn't make practical sense in the context (since production can’t be negative), we interpret the result to mean the business never turns a profit under these conditions.

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Key Concepts

These are the key concepts you need to understand to accurately answer the question.

Inequalities
Inequalities are mathematical expressions showing that one quantity is greater than, less than, or not equal to another. They are crucial in many real-world scenarios, such as deciding how many products need to be sold to break even or make a profit. Consider the inequality in this exercise: the revenue must be greater than the costs for a profit to occur. Inequality symbols include:
  • ">" (greater than)
  • "<" (less than)
  • "≥" (greater than or equal to)
  • "≤" (less than or equal to)
When working with inequalities, remember that performing certain operations, like multiplying or dividing both sides by a negative number, reverses the inequality sign. Here, dividing both sides of the inequality \(-6x > 120\) by \(-6\) flipped the sign, changing the inequality from an invalid scenario, \(x > -20\), to determine where the original inequality holds true. However, real-world constraints, like a non-negative amount of products, ensure certain answers, like non-existent negative production solutions, are logically interpreted and applied.
Linear Functions
Linear functions are mathematical expressions that create straight lines when graphed. They have the general formula \(f(x) = mx + b\), where \(m\) is the slope and \(b\) is the y-intercept. In this exercise, the cost function \(C(x) = 11x + 120\) and the revenue function \(R(x) = 5x\), are both linear.
The slope \(m\) represents the rate of change. For cost, \(m = 11\) means that the cost increases by 11 units per product. For revenue, \(m = 5\) indicates a 5-unit revenue increase per product unit sold. The y-intercept \(b\), which is \(120\) in \(C(x)\), shows fixed costs — expense at the outset before selling any product.
Understanding these concepts helps in visualizing the behavior of both functions. By comparing, one can find solution points like the break-even or profit points by setting these equal or using inequalities as shown in this exercise.
Cost and Revenue Analysis
Cost and revenue analysis is essential to determining when a business becomes profitable. Costs include fixed costs, incurred regardless of production, and variable costs, changing with production level. In our scenario, \(C(x) = 11x + 120\) highlights this, with \(11x\) as the variable part and \(120\) as fixed.Revenue refers to the total money a business makes, expressed as \(R(x) = 5x\). The goal is to find when this revenue exceeds costs, as seen in the inequality \(R(x) > C(x)\) or \(5x > 11x + 120\). In a typical analysis, finding when these lines intersect (break-even) or when revenue surpasses cost (profit) marks critical decision points.
Yet in this case, the inequality solution, \(x < -20\), proved technically infeasible, indicating a fundamental issue with pricing or cost structure needing reassessment. Thus, cost and revenue analysis not only identifies potential profit points but also highlights when business strategies need re-evaluation. By understanding these mathematical models, businesses can better prepare for financial success.

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