A company has established that the relationship between the sales price for one

Question

A company has established that the relationship between the sales price for one of its products and the quantity sold per month is approximately p 65-0.1 D (D is the demand or quantity sold per month and p is the price in dollars). The fixed cost is $1,900 per month and the variable cost is $30 per unit produced. a. What is the maximum profit per month for this product? b. What is the range of profitable demand during a month? a. The maximum profit per month for this product is $(Round to the nearest dollar.)

Explanation / Answer

Answer : P= 65-0.1D

TR = PD = 65D --0.1D 2

MR = 65- 0.2D

MC = 30

MR = MC ( Profit Maximisation level)

65-0.2D = 30

35 = 0.2D

D = 175 units

a : Maximum profit = TR - TC

TR = PD = 65*175-0.1*(175) 2 = $8312.5

TC = FC +VC = 1900+30D

TC =1900+30*175=$ 7150

Maximum profit = $8312.5-$7150 = $1161.5 or $1162

B: Range of profitable demand during amonth :

Demand = 175units ( Maximum profit)

Demand for the maximum profit starts from approximately 70 units ( at this level they able to earn $60) and up to the profit can attain by selling 300 units of the product. It is level where profit has been attained.

Range ,= 70-300 units of Product

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.