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Mickey Mouse has a trap company with fixed costs of $89,000 and operating costs of $50 per trap and a market demand curve of price=950-.10(output). Since Mick can't set his price find the revenue equation for his mousetrap business.
a) Construct the profit equation as a function of output using the demand equation. What does this relationship mean in the business sense.
b) Graph the function and find the breakeven points and other critical values. List the profits for every output level starting at 0 and continuing until output is 9,500.
c) Calculate the price that can be charged for every output level in your table. Where is profit a maximum? What is Mr. Mouse's bottom line?