1. A company has determine the price and the monthly demand of its products are related by 2700 5000 D2 the equation p = 38 + D is the monthly demand. The associated fixed costs are $1000 per month and the variable costs are S40/ unit. Use this information to answer the following: a. What is the optimal number of units that should be produced and sold each month? b. Show that your answer in (a) maximizes profit. c. Determine the value of D that represents the break-even point? for D> 1, where p is the price per unit in dollar and %3D D

1. A company has determine the price and the monthly demand of its products are related by 2700 5000 D2 the equation p = 38 + D is the monthly demand. The associated fixed costs are $1000 per month and the variable costs are S40/ unit. Use this information to answer the following: a. What is the optimal number of units that should be produced and sold each month? b. Show that your answer in (a) maximizes profit. c. Determine the value of D that represents the break-even point? for D> 1, where p is the price per unit in dollar and %3D D

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.1IP

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