(a) The cost to produce the Rolls-Royce can be estimated at $200 million of fixed costs (factory maintenance, equipment leasing, labor, etc.) plus $110000 per vehicle. Write profit P, in thousands of dollars, as a formula involving the price per vehicle, p (in thousands of dollars), and q the quantity of vehicles produced: P = The profit associated with the production and sale of a product is the difference between the product's revenue and the cost to produce it. (b) In 2011, Rolls-Royce sold 3538 cars at an average price per vehicle of $200 thousand. Assume that the demand for these vehicles is proportional to the price, p, in thousands of dollars, and write a formula for the quantity of Rolls-Royce vehicles demanded as a function of p. q= D(p) 17.69p (c) Use the demand model from part (b) to rewrite your profit formula from part (a) so that P is a function of only p. P(p) =

(a) The cost to produce the Rolls-Royce can be estimated at $200 million of fixed costs (factory maintenance, equipment leasing, labor, etc.) plus $110000 per vehicle. Write profit P, in thousands of dollars, as a formula involving the price per vehicle, p (in thousands of dollars), and q the quantity of vehicles produced: P = The profit associated with the production and sale of a product is the difference between the product's revenue and the cost to produce it. (b) In 2011, Rolls-Royce sold 3538 cars at an average price per vehicle of $200 thousand. Assume that the demand for these vehicles is proportional to the price, p, in thousands of dollars, and write a formula for the quantity of Rolls-Royce vehicles demanded as a function of p. q= D(p) 17.69p (c) Use the demand model from part (b) to rewrite your profit formula from part (a) so that P is a function of only p. P(p) =

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter11: Price And Output Determination: Monopoly And Dominant Firms

Section: Chapter Questions

Problem 6E

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