Elizabeth Wilkins Blog #3

A+ B) The imaginary company “Lingeo” has invented a new speech-to-soeech translation tool that allows speakers of variant languages to seamlessly communicate to one another.  The company sells a software for smart phones (iPhones, Androids, etc.) in the form of an application that allows buyers to speak into their iPhone in their native language, and have the device repeat what they said in a different language. This technology will address the issue of language barriers that exist. Currently Lingeo is in a developmental phase. The software is being fine-tuned and is formatted to include all major languages spoken. The team an Lingeo continues to work hard providing updates to the application that will allow for it to cater to more languages in a faster, more streamlined manner. The company was founded in effort to provide communication aid in conflict areas, both those afflicted by war and by natural disasters. The ease of use and mobility of the application would allow soldiers and international workers to communicate with local citizens. With the debut of this speech-to-speech technology coming this month, Lingeo has attracted the most attention from global business who are constantly restricted by their inability to effectively communicate with interactional partners. Lingeo hopes to generate a profit from these interests in the corporate world. The revenue can then be cycled back into feeding company expenses, enhancing the software, and most importantly aiding conflict zones with the technology. 

C) Due to the high level of technology that is required for Lingeo’s technology to develop, fixed costs were high. Large investments of funds were funneled into the startup. Total fixed costs were about $5 million. The team at Lingeo consists of the highest intellects in the field of communication technology, thus their payment was a priority. Also included in the fixed costs were the tools to develop the software, a facility, and a team of employees to support the main software developers.

D) Because Lingeo’s speech-to-speech technology is an app, a portion of each unit sold will be cycled back into the company to cover additional costs; however, there is not manufacturing costs as there would be with a traditional manufacturing company. $1,500 will serve as the variable costs. 

E) The price of Lingeo’s speech-to-speech technology is $3,000 per device it is installed on. It is expensive, but it is not for the average citizen at this point in development.

F) C(q) = 5,000,000,000 + 1,500q

G) R(q) = 3,000q

H) P(q) = 1,500q - 5,000,000,000

I) 3,333,334  units produced because C(q) = R(q)

J) 

Title of graph: Cost and Revenue Function for Lingeo

Key: Cost function is green, Revenue Function is Purple, Breakeven point -- (3,333,333.33, 0), X axis = units, Y axis = dollars

K) The break even point is where the cost function and revenue function intersect. This is where Lingeo starts to make a profit. The slope of the the cost function is the marginal cost, meaning each increase by one uit is the cost of producing an additional unit. The slope of the revenue function is the marginal revenue, meaning each increase by one unit is the money made from that one unit. 

L) 

M) The profit function tracks how much money Lingeo will make dependent on how many units they sell.

PART 3

• Lingeo produces 10,000 units on a daily basis (really it's infinite because an app is the unit, however for this exercise)

• C'(q) = 1500q, 1500(10,000) = $15,000,000

• a(q) = c(q)/q 5015000000/10000 = $501500

•   
  

1) C'(q) = 1500(10,000) << larger R'(q) = 3,000
2) Before, so the company is not yet making a profit.
3) Yes, the costs would still be offset.
4) It decreases the average cost. 
5) Decreasing, because this increases profit. 

PART FOUR
1) Based on my experiment, I think the company will succeed. Their profits are set to increase after the breakeven point, and the demand for the product will be continuous.
2) Both mathematically and economically Lingeo's technology is expected to thrive. The company could have members who use the software renew their membership each year, which would continuously generate profit.  This software also has many applications, both business and persona;, that can grow the company is generate income. Speech-to-speech technology is an evolutionary concept. Were it to materialize, it would be immensely profitable and expand possibilities for globalization.