A company has determined that its profit for a product can be described by a linear function. The profit from the production and sale of 150 units is $455, and the profit from
250 units is $895.
(i) What is the average rate of change of the profit for this product when
between 150 and 250 units are sold?
(ii) Write the equation of the profit function for this product.
(iii) How many units give break-even for this product?
(b) You are the CEO for a lightweight compasses manufacturer. The demand
function for the lightweight compasses is given by p = 40 − 4q
2where q
is the number of lightweight compasses produced in millions.It costs the company $15
to make a lightweight compass.
(i) Write an equation giving profit as a function of the number of lightweight compasses
produced.
(ii) At the moment the company produces 2 million lightweight compasses and makes a profit
of $18,000,000, but you would like to reduce production. What smaller number of
lightweight compasses could the company produce to yield the same profit?

Step-by-step explanation:

(a)(i) The average rate of change is:

(895 − 455) / (250 − 150)

4.4

(a)(ii) Since the profit is linear, the slope of the line is equal to the average rate of change.  Using point-slope form:

y − 455 = 4.4 (x − 150)

Simplifying to slope-intercept form:

y − 455 = 4.4x − 660

y = 4.4x − 205

(a)(iii) The break-even point is when the profit is 0.

0 = 4.4x − 205

4.4x = 205

x = 46.6

(b)(i) The "demand function" is the selling pice of the compasses:

p = 40 − 4q²

where p is the price in dollars and q is the quantity in millions of units.

Profit is revenue minus cost.

P = R − C

P = pq − 15q

P = (p − 15) q

P = (25 − 4q²) q

P = 25q − 4q³

where P is the profit in millions of dollars and q is the quantity in millions of units.

(b)(ii) Find values of q when P = 18.

18 = 25q − 4q³

4q³ − 25q + 18 = 0

We know that q=2 is a root of this equation.  Using grouping:

4q³ − 8q² + 8q² − 25q + 18 = 0

4q² (q − 2) + (q − 2) (8q − 9) = 0

(q − 2) (4q² + 8q − 9) = 0

4q² + 8q − 9 = 0

Solve with quadratic formula.

x = [ -b ± √(b² − 4ac) ] / 2a

q = [ -8 ± √(8² − 4(4)(-9)) ] / 2(4)

q = (-8 ± √208) / 8

q = (-8 ± 4√13) / 8

q = (-2 ± √13) / 2

Since q is positive, q = (-2 + √13) / 2, or approximately 0.803.