Question

A high school student has started a new business making and selling bumper stickers. The graph shows the break-even point for the business.

1. Identify the following on the graph and explain the meaning of each for the business:
• Cost equation
• Revenue equation
• Break-even point

2. How would the graph change if the price of each bumper sticker was lowered? If the price was increased?

3. What advice would you give this business owner? Explain.

Answer 1

A)
Cost y= 1/2x + 40
Revenue y= 3x
Brake even point (20,60)

The cost is how much he pays for a number of stickers each sticker cost him 50¢ plus a $40 fee probably for shipping

The revenue is how much he sells them for $3 a sticker

The break even point is when he has made his money back

B)
The slope would be smaller which would cause him to have to sell more stickers to break even

C)
If I'm right and the 40 fee is shipping my advise would to be to buy in bulk