Question

Consider the following function, where

r is the revenue (in thousands of dollars) and
x is the advertising cost (in thousands of dollars). What does the function represent?
a) Profit in thousands of dollars
b) Advertising revenue in thousands of dollars
c) Total revenue in thousands of dollars
d) Cost of goods sold in thousands of dollars

Answer 1

The function where 'r' represents revenue in thousands of dollars is indicative of the total revenue a firm generates from selling its products, not accounting for any costs.

Step-by-step explanation:

The student has asked about the function where r represents the revenue in thousands of dollars and x is the advertising cost in thousands of dollars. We must determine what the function represents from the provided options.

From the reference information, it is clear that total revenue is calculated by the equation Total Revenue = Price x Quantity. This is the income a firm generates from selling its products. Advertising costs, which are included in total costs, are what the firm pays for producing and selling its products, including the costs of converting inputs to outputs, whereas profit is the difference between total revenue and total cost.

Therefore, since the function given represents the variable r as revenue, the correct answer from the options provided would be: c) Total revenue in thousands of dollars. It represents the income the firm expects to generate from selling its products, before any costs, such as advertising, are deducted.