A company has determined that the price and the monthly demand of one of its pro

Question

A company has determined that the price and the monthly demand of one of its products are related by the equation D = Squareroot (400 - p), where p is the price per unit in dollars and D is the monthly demand. The associated fixed costs are $1, 125/month, and the variable costs are $100/unit. Use this information to answer Problems 2-52 and 2-53. Select the closest answer. What is the optimal number of units that should be produced and sold each month? (a) 10 units (b) 15 units (c) 20 units (d) 25 units Which of the following values of D represents the breakeven point? (a) 10 units (b) 15 units (c) 20 units (d) 25 units

Explanation / Answer

52)

given D=(400-p)

400-p=D2

p=400-D2

total revenue R=p*D

R=(400-D2)*D

R=400D-D3

total cost C=1125 +100D

total profit P =R-C

P=400D-D3-100D-1125

P=300D-D3-1125

for maximum profit dP/dD=0 ,d2P/dD2<0

dP/dD=300-3D2=0

3D2=300

D2=100

D=10

optimum number of units that should be produced and sold each month =10 units

53) for breakeven point profit =0

300D-D3-1125=0

D=15 units

D =15 represents breakeven point

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.