1. 1 A company has determined that the relationship between the sales price for
ID: 2806920 • Letter: 1
Question
1. 1 A company has determined that the relationship between the sales price for one of its products and the quantity sold per week is P- 650- 10D per unit, where D is the demand or quantity sold per week and p is the price in dollars). Fixed weekly costs are $1000, and the variable cost is $25/unit (20 pts) a) What number of units should be produced per week and sold to maximize net profit? (10 pts) b) What is the maximum profit per week associated with this product? (5 pts) c) What is the breakeven points? (10 pts)Explanation / Answer
Answer:
1. P = 650 - 10 *D per unit, where D = Quantity Demanded per week.
P = $(650*D - 10* D^2)
Differentiating above equation for D, we get
D = 650/20 = 32.5 units, which is approx 33 units per week must be sold for maximum profit.
2. Max Profit
650*33 - 10*33^2 - 25*33 - 1000 = $8,735.
3. Break Even Units
BEU = 1000/(650-10*33-25) = 3.4 units which is approx 3 units.
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