Section 8.1 Expanded: Constructing the nonlinear profit contribution expression

Question

Section 8.1 Expanded: Constructing the nonlinear profit contribution expression Let PS and PD represent the prices charged for each standard golf bag and deluxe golf bag respectively. Assume that "S" and "D" are demands for standard and deluxe bags respectively. (8.1) (82) S=2250-15PS D=1500-5PD Revenue generated from the sale of S number of standard bags is PS S. Cost per unit production is $70 and the cost for producing S number of standard bags is 70 S So the profit for producing and selling S number of standard bags = revenue-cost- PSS-70S (8.3) By rearranging 8.1 we get 15PS = 2250-S or PS = 2250/15-S/15 or PS = 150-S/15 (8.3a)

Explanation / Answer

Section 8.1 Expanded: Constructing the nonlinear profit contribution expression Let PS and PD represent the prices charged for each standard golf bag and deluxe golf bag respectively. Assume that "S" and "D" are demands for standard and deluxe bags respectively. (8.1) (82) S=2250-15PS D=1500-5PD Revenue generated from the sale of S number of standard bags is PS S. Cost per unit production is $70 and the cost for producing S number of standard bags is 70 S So the profit for producing and selling S number of standard bags = revenue-cost- PSS-70S (8.3) By rearranging 8.1 we get 15PS = 2250-S or PS = 2250/15-S/15 or PS = 150-S/15 (8.3a)

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