C(x)= Total variable cost + Total Fixed cost C(x) = v(x) + F

R(x) = (price/unit)(quantity sold) R(x) = px

Profit (or Loss) =Total Revenue – Total Cost P(x) = R(x) – C(x)
 Lecture # 4 Quardatic
Quadratic Equations is an equation that can be written in the form ax + bx + c = 0
2

where a, b, and c are real numbers with a  0

Another name is second-degree polynomial in x.

f ( x ) = ax 2 + bx + c , a0
Opens upward
If a > 0 , minimum Each parabola is symmetric about
a vertical line goes through
the vertex is called the axis of symmetry .

x
Minimum
 −b 
Vertex  xv = , y = f ( xv )  .
 2a 
Maximum
y-intercept = c

x
If a < 0 , maximum
f ( x ) = ax 2 + bx + c , a 0
Opens downward
b 2 − 4ac  0 → 2 x − int ercept
− b  b − 4ac
2
find x - intercept : x = b 2 − 4ac = 0 → 1 x − int ercept ( same with vertex)
2a
b 2 − 4ac  0 → no x − int ercept
 y
axis of symmetry

ax2 + bx + c = 0 use factorization or − b  b2 − 4ac

x-intercept x=
quadratic formula 2a

b2 - 4ac > 0 ➔ 2 x-intercepts

x
b2 - 4ac = 0 ➔ 1 x-intercept
b2 - 4ac < 0 ➔ none
y-intercept vertex (turning point depending on the direction)

y-intercept = c b
lowest (minimum ) point or highest (maximum) point x=−
2a
Example 1 Graph f (x) = − x 2 + 60x + 0
y = ax 2 + bx + c → a = −1, b = 60, c = 0
y-intercept = c = 0 → (0,0)

-b
vertex is at x = = - (60) / 2(-1) =30
2a
2
y = f( 30) = − x + 60x = −(30) + 60(30) = 900 → (30,900)
2

x-intercept,
y
− b  b 2 − 4ac
x= . (30,900)
2a 900 Range (value of y): y  900
− (60)  (60) 2 − 4(−1)(0) − 60  60
x= =
2(−1) −2
− 60 + 60 − 60 − 60 . a = −1 .
x= or
−2 −2 a0
x = 0 → (0,0) or x = 60 → (60,0)
180 Open downward

x
10 60
Example 3 According to the data from the National Highway Traffic Safety
Administration, the accident rate as a function of the age of the driver in years x
can be approximated by the function defined by f (x) = 60 - 2.28x + 0.023x2

Find the age at which the accident rate is a minimum.

Equilibrium point → intersect point of demand & supply → supply price = Demand price
0.5 x 2 + 100 = 500 − 10 x
0.5 x 2 + 100 − 500 + 10 x = 0
p = 0.5 x + 100
2

0.5 x 2 + 10 x − 400 = 0
ax 2 + bx +c =0
a = 0.5, b = 10, c = −400

p = 500 − 10 x − b  b 2 − 4ac
x=
2a
− (10)  (10) 2 − 4(0.5)(−400)
x=
2(0.5)
− 10  100 + 800
x=
1
− 10  900
x=
1
x = 20 or x = −40(can not negetive)
Equilibrium quantity is x = 20 units

p = 500 – 10x = 500 – 10(20) = $ 300

Equilibrium point = ( 20 units, $300)
At linear problem, p = $300 → linear R(x) = p.x = 300x→ price per unit is constant.

v = $200 , F =$9000 → linear C(x) = v.x + F = 200x + 9000→ variable cost per unit is constant

In a business environment to depend on the number of items demanded.

That is , the more items that is in demand , the less the price per unit is .

Example:
p = 300 – 0.6x → not linear → price per unit is not constant.

v = 0.4x +140 → not linear → variable cost per unit is not constant.
Example 3. Suppose that the company has fixed cost of $1500 and
variable costs of 0.4x + 140 dollars per unit (v), where x is the total number units produced. Suppose
further that the weekly demand function for this product is p = 300 – 0.6x.
(a) Find break-even quantities ( At →Profit = 0 )?

P(x) = R(x) – C(x)

= (p).x – { vx + F }
=(300-0.6x)x - {(0.4x + 140)x + 1500 }
P(x) = 300x - 0.6x2 - {0.4x2 + 140x + 1500}
P(x) = 300x - 0.6x2 - 0.4x2 - 140x - 1500
P(x) = -1x2 + 160x - 1500

P(x) = 0
-1x2 + 160x - 1500 = 0
0 = 1x2 - 160x + 1500
0 = (x -10)(x - 150)
x – 10 = 0 or x - 150 = 0
x = 10 →(10 unit, profit $0) or x = 150→ (150 units, profit $0)
(b)Find the number of units (x = ? unit ) that will produce maximum profit (at vertex point)
P(x) = -1x2 + 160x - 1500
-b = -(160)
x= = 80 units f ( x) = ax 2 + bx +c
2a 2(-1) a = −1, b = 160, c = −1500

(c) What is maximum profit ( at x = 80 )?

P(x) = - 1x2 + 160x - 1500

P(80) = - 1(80)2 + 160(80) - 1500 = $4,900

(d) What unit price ( price = ? ) will maximize profit ( at x = 80 ).

price → p = 300 - 0.6x = 300 - 0.6(80) = $252 per unit.

e. Compare the level of production (x = ? unit ) to maximize profit with the level to maximize revenue.

R(x) = – 0.6x2 + 300x

f(x) = ax2 + bx +c→ a= - 0.6 ,b = 300 ,c = 0
-b -(300)
Maximum revenue at vertex x = = = 250 units
2a 2(- 0.6)
But, Maximum profit P(x) = -1x2 + 160x - 1500 → at x = 80 units

Do you agree ? “No”.

Why ? Revenue function and Profit function are not the same functions.
f. Sketch the graph of profit function.
Profit = 0 (break-even) → y = 0 ( x- intercept ) at x = 10 and x = 150

P(x) .
Maximum profit occur at
(80, $4900)

P(x) = -1x2 + 160x - 1500

. 20 80
.
160
x

(0,-1500)

g. Find the values of x that produce a profit, → x > 10 and x <150 → 10 < x < 150

h. Find the values of x that result in a loss or negative profit. 0  x  10 or x  150

Example 5. When a wholesaler sold a certain product at $25 per unit, sales were 800 units each week.
However, after a price increase of $5,
The average number of units sold dropped to 775 per week. Assuming that the demand function is
linear.
Find the price that will maximize the total revenue → find revenue = (price equation).(x)
R( x) = (- 0.2x + 185)( x )
+$5 = - 0.2 R( x) = −0.2 x 2 + 185 x
(800 units ,$25) Change in $y
m = Change in x
=- 25 units
f ( x) = ax 2 + bx +c
a = − 0.2, b = 185, c = 0
y − y1 = m(x − x1 )
p − 25 = − 0.2(x − 800) Re venue is max imized at vertex
−b
p - 25 = - 0.2x + 160 x=
2a
p = - 0.2x + 160 + 25 − 185 − 185
x= = = 462.50
Linear price equation = − 0.2x + 185 2(−0.2) − 0.4

price = − 0.2 x + 185

p = −0.2(462.50) + 185 = $92.50

At Price $92.50 ,it will maximize revenue.

Example 4
A golf pro-shop operator finds that she can sell 30 sets of golf clubs at $500 per set in a year.
Furthermore, she predicts if price decreased by $25 , three extra sets of golf clubs can be sold.
At what price should she sell the clubs to maximize gross income(Revenue) ?

(30 sets ,$500)

-$25
m = ∆$y
-25
∆x = +3
= 3

y − y1 = m(x − x1 ) R = (price equation).x

− 25  − 25
R=

x + 750  . x
p − 500 = (x − 30)
3  3 
− 25 − 25 2
p − 500 = x + 250 R= x + 750x
= 2
3 3
− 25 ax + bx + c
p= x + 750
3 − 25
a= , b = 750, c = 0
3
− b − (750)
x= = = 45
2a 2( − 25 )
3
− 25
price  p = (45) + 750 = $375 per set.
3
 2. Suppose a Company has the total fixed cost $2100 and variable cost per unit is $24.

Suppose selling price per unit is 200 - 0.2x.

a. Find revenue function. __________________

b. Find cost function. __________________

c. Find the profit function. ______________________

d. The break-even quantities are ______________ and _______________ units.

e. How many unit must be sold for the company to have maximum profit? ________ units.

f. What is the selling price per unit must be charge in order to make maximum profit?

g. What is the maximum profit? $ ____________.

h. For what value of x will there be profit for the business? _________________
i. For what value of x will there be loss for the business?_________________________