You operate a web site where users must pay a small fee to log on. WHen you char

Question

You operate a web site where users must pay a small fee to log on. WHen you charged $2 the demand was 280 log-ons/month. WHen you lowered the price to $1.50, the demand increased to 560 log-ons/month. a)Construct a linear demand function and obtain the monthly revenue as a function of the log-on fee x. b)Your internet provider charges you a monthly fee of $30 to maintain your site. Express your monthly profit as a function of the longon fee x, and then determine the logon fee you should charge to obtain the largest possible monthly profit. WHat is the largest possible monthly profit?

Explanation / Answer

a) R = ax + b 2 x 280 = 2a + b 1.5 x 560 =1.5a + b a = -560 b = 1680 R = 1680 - 560 x b)Profit = R -30 = 1680-30 -560 x = 1650 -560 x Max profit = 1650

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