Question

Your company may wish to release a new e-reader device. Based on data collected from various sources, your company has come up with the following regression equation for the profit of the new e-reader:

Profit = $0.15 × number of e-readers sold – $28

Or, assuming x = the number of e-readers sold, this would be the same regression equation:

Profit = 0.15x – 28

In this case, the values are given in thousands (i.e., the cost of making an individual e-reader will be $150 [0.15 × 1,000], with $28,000 [28 * 1,000] in constant charges).

Answer 1

Based on the results of the graph and the profit equation provided, discuss the relationship between profits and number of e-readers produced. (Hint: Consider the slope and y-intercept.)

If the company does not sell a single e-reader, how much is lost ? Mathematically, what is this value called in the equation?

If the company sells 5,000 e-readers, how much will the company make (or lose)?
If profit must equal 100 thousand, how many e-readers will your company need to sell? (Round up to the nearest e-reader.)

If your company is hoping to break even, how many e-readers will need to be sold to accomplish this? (Round up to the nearest e-reader.)Please submit your assignment.

Answer 2

Profit = 0.15x – 28

1.There is a positive relationship between the profit and the number of e-readers produced, because of the slope 0.15 which is positive. That means when there is a increase in the number of e-readers produced, there is a increase in profits.
Also, the y-intercept is negative. This means that there are pre-production costs. When production is 0 (x=0), the profit is negative. This implies the cost.

2. y-intercept is -28. When 0 e-readers is sold, the company loses 28 000. Mathematically this number is called the y-intercept.

3. When company sells 5000 e-reader, x= 5000.
Profit = 0.15(5000) -28 = 722.
Profit= $722 000

To earn 100 000. Profit= 100
100=0.15x - 28
x= 854

4. To break even, profit=0
0=0.15x -28
x=187

Answer 3

Thanks .