Food-Processing-Plant-Design-layout

Food Processing Plant Design & layout
11.2 Total revenue function
Fig 11.1 A Demand Curve
Total revenue of the enterprise is simply the amount of product sold multiplied by the unit
price charged. Therefore,
Total Revenue (TR) = (unit price) (volume) = PD
Where,
P = unit price, = (a – b D)
D
= amount of product sold, (Volume)
Using the demand function, total revenue can be expressed in terms of D alone,
TR
= (a – b D) D = a D - b D2 for 0 ≤ D ≤ a/b
= 0 otherwise
Now if one were dealing with a peculiar enterprise, which has no costs at all, or has only
costs independent of the volume of production, then maximizing profit would be achieved
by maximizing total revenue. The volume that will maximize total revenue can be found by
the usual methods of calculus (Fig 11.2).
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