A large company in the communication and publishing industry has quantiﬁed the relationship between the price of one of its products and the demand for this product as Price = 150−0.01 × Demand for an annual printing of this particular product. The ﬁxed costs per year (i.e., per printing) = $50,000 and the variable cost per unit=$40. What is the maximum proﬁt that can be achieved if the maximum expected demand is 6,000 units per year? What is the unit price at this point of optimal demand?

A large company in the communication and publishing industry has quantiﬁed the relationship between the price of one of its products and the demand for this product as Price = 150−0.01 × Demand for an annual printing of this particular product. The ﬁxed costs per year (i.e., per printing) = $50,000 and the variable cost per unit=$40. What is the maximum proﬁt that can be achieved if the maximum expected demand is 6,000 units per year? What is the unit price at this point of optimal demand?

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

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 5E

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